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Corel stock takes a tumble

Corel stock plummeted following the software maker's announcement that it is selling off its Computer Aided Design (CAD) division.

Corel (COSFF) stock plummeted 21.14 percent today, following the software maker's announcement that it was selling off its Computer Aided Design (CAD) division, which came one day after it reported a drop in third-quarter revenues and a widening net loss.

The company's stock closed at 3-29/32, down 1-3/64 from yesterday under heavy volume.

Corel said today that it has sold the rights to its CAD software products to International Microcomputer Software (IMSI) in exchange for $5.6 million in IMSI stock and cash.

Under a separate arrangement, IMSI said it plans to hire about 20 Corel employees and will establish a development center in Ottawa, Canada.

The products to which IMSI acquired rights include CorelCAD Modeler, CorelCAD Technical, CorelFLOW, Corel Click & Create, Corel Lumiere, Corel Family Tree Suite, Corel Family Publisher, and Corel Personal Architect.

The transaction is expected to close by September 30, and will be accounted for as a purchase, IMSI said. It is estimated that the majority of the acquisition price will be expensed primarily as in-process research and development in the September 1997 quarter.

"This transaction with IMSI allows Corel to sharpen its focus on the core strategic products relating to our concentration on the corporate marketplace," Michael Cowpland, Corel's president and chief executive said.

Earlier this month Corel issued a preliminary warning that its revenues and net income would fall short of analyst expectations, but beat analysts' revised estimates for its loss.

The company posted a net loss of $31.4 million, or 47 cents a share, for the quarter ending August 31, compared with a loss of $3.2 million, or 5 cents a share, a year ago. Wall Street revised estimates of a loss of 50 cents, according to First Call.

Corel reported revenues of $55.8 million for the quarter, down from its year-ago figure of $84.9 million. The company said its revenues would have been higher had it accounted for orders from and shipments to resellers. But because it wanted to reduce its inventory in the distribution channel, it did not account for those sales, the company said.

Reuters contributed to this report.