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Corel warns of huge loss

The company says it expects to report a loss for its first quarter of approximately $0.24 per share. Analysts had expected a profit of 3 cents per share.

2 min read
Software maker Corel is still struggling to make a buck.

The company said today it expects to report a big loss for its first quarter of approximately $0.24 per share. Corel said revenues for the quarter, which ended February 28, would total approximately $40.3 million. That compares with sales of $45.4 million and a loss of $0.36 per share in the same period one year ago.

Wall Street expected the company to report a profit of 3 cents per share for the quarter, according to First Call.

Corel had been on the comeback trail in its struggle to combat Microsoft in the business software market. In January, Corel reported a fourth quarter profit of 10 cents per share on revenue of $67.2 million.

Company executives blamed the latest quarter's slowdown on weaker-than-expected sales of its two flagship products, WordPerfect and CorelDraw.

"In January, we stated that this quarter would be a significant revenue challenge," said Corel executive vice president and chief financial officer Michael O'Reilly in a statement today.

"We knew we would be managing the very end of the life cycles of the current versions of our two flagship brands through Q1. This was the fifth consecutive quarter without a major release of either of these products as Corel extended its development cycle to ensure delivery of quality products to its customers."

The chief executive of the Ottawa-based software company explained that the first quarter is traditionally the company's lowest seasonal demand quarter. "However, sales slowed much faster than anticipated by both management and analysts," he said.

This seems to be a recurring theme in the ongoing saga of the company. Corel had suffered large losses since acquiring office software suite maker WordPerfect in 1996 and in its long-running battle with industry leader Microsoft. Last year it was forced to lay off 340 workers.

However, O'Reilly said the company still has some fight left.

"While we are clearly disappointed with Q1 revenue levels, I believe that the shortfall is restricted to the first quarter," said O'Reilly. "I continue to expect fiscal 1999 to be a year of overall success for Corel."

Both Corel's WordPerfect Office 2000 and CorelDRAW 9 Graphics Suite are slated to ship in the current quarter.