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No Corel profit yet, but Cowpland optimistic

Sales are up, but a consolidation charge means profit escaped for another quarter

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Corel's sales for its Q3 increased by 46 per cent over the year earlier quarter and were sequentially up 13 per cent from the previous quarter. However, profit remained elusive. The loss reported yesterday was marginally down from the previous quarter and attributed to a one-time restructuring charge of $15.9 million for consolidation of Corel's Utah operations to its Ottawa HQ. Without this charge, the loss would have been changed to a $7.6 million gross profit. The cost of sales increased only 13 per cent, so the gross profit showed a 58 per cent increase over the year-earlier quarter. Expenses, apart from restructuring, were down significantly, mainly from a cut in advertising of $13 million over the year-earlier quarter. The cash and short-term investments are now $20 million, compared with $30 million at the end on November, when the financial year ended. Shares were unchanged at $2 1/16. The company said that despite the move, future product releases remain on schedule. Michael Cowpland, the CEO, said: "We anticipate a return to profitability by our fiscal year end. We believe that our results will continue to improve and are consequently targeting sustainable profitability beginning in the fourth quarter of fiscal 1998." Corel continues to experience a declining market share for its WordPerfect Suite and CorelDraw, although the growth in the market size provides some compensation. The worst may now be past. ® Click for more stories

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