VNU Net: Corel’s financial woes worsen

By Ian Lynch, VNU Net

Troubled Canadian software supplier Corel’s second quarter loss
may be double that expected, the company has reported.

Corel said revenue for its second quarter should be $37m to
$38m, and it will report a loss of between $22m and $24m. Last
month, the company said its loss would be similar to the $12m it
lost in the first quarter of the year. One year ago, revenue was
$70.5m for the same quarter.

The company’s impoverished status came to light following the
cancellation of a proposed merger with Inprise/Borland, which would
have created a Linux powerhouse. Corel had previously warned the US
Securities and Exchange Commission that it could run out of cash if
the merger didn’t go ahead.

Currently looking to replenish dwindling cash reserves through
issuing more stock, Corel last week cut a fifth of its staff (320
jobs) in the first stage of its strategy to slash $40m per annum
from annual expenses. Analysts said the cuts may raise half the
desired $40m and more job losses may follow later.

John Blaine, chief financial officer at Corel, said: “While the
revenue is less than originally expected, the company’s expenses
are also reduced from the first-quarter levels.

“The company is making progress toward its goal of realigning
its cost structure.” No reasons were given for the poor results,
although Corel is currently in a quiet period after recently filing
a prospectus for its refinancing.