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Losses grow for Corel

The Canadian software maker, in the midst of a difficult turnaround bid, reports a much steeper loss for its fourth quarter and 2002 fiscal year.

Canadian software maker Corel, in the midst of a difficult turnaround bid, on Monday reported a wider loss for its fourth quarter and 2002 fiscal year.

The company, best known for its WordPerfect office software and its graphics applications, reported a net loss of $27.8 million and revenue of $33.5 million for the fourth quarter, which ended Nov. 30. That compares with a loss of $10.7 million, on revenue of $31.6 million, in the same period a year ago.

Excluding severance, goodwill write-downs and other one-time charges, the fourth-quarter loss totaled $13.5 million, or 15 cents a share. Analysts polled by research firm First Call had expected a loss of 12 cents a share.

The company slashed its work force by 22 percent in November.

For the year, Corel's loss totaled $96.42 million, on revenue of $126.7 million. That compares with a loss of $7.32 million and revenue of $134.32 million in 2001.

The company said in its earnings statement that it expects to return to a pro forma profit this year, but did not provide financial estimates.

"We expect the enterprise sales to ramp up through the course of the year," CEO Derek Burney said in a conference call with financial analysts following the announcement. "But history has taught us a very valuable lesson, which is that the prevailing economic conditions have a tremendous impact on our ability to generate revenue. That's why while internally were very optimistic about these things, we're not prepared at this time to offer any guidance."

Corel is trying to turn around its business by appealing to enterprise customers with applications that easily integrate Extensible Markup Language (XML) functions into business processes.

The company also hopes to gain ground from recent WordPerfect wins with major PC makers such as Dell Computer and Hewlett-Packard, which now offer the program on most low-end consumer PCs. Corel stands to make little money directly from the deals but hopes to profit when customers upgrade, a strategy many analysts doubt will pay off.

"The good news is that the more people have WordPerfect on their system, the more they realize what a great product it is and the more they tell other people," Burney said during the call. "We do expect to see some significant upgrade revenue over the coming years from those deals."