Corel sacks 66 in profitability drive
Q2 sales below expectations
Corel has rid itself of just under ten per cent of its worldwide workforce in a bid to save $4.2 million worth of operating expenses and better "manage expenses relative to its expected revenue performance".
The software company today published its Q2 results: it lost $5.6 million (six cents a share) on sales of $32.2 million. Both figures represent a small improvement on Corel's performance in Q2 2002. Then, it lost $6.4 million (seven cents a share) and realised revenues of $30.8 million. Last quarter, its made sales worth $28.3 million, but only lost just over half a million US dollars.
The company's figures were below expectations, CEO Derek Burney said in a statement, hence the need to lower the headcount by 66 workers, or nine per cent of the workforce. Corel will take a $655,000 charge to cover the redundancies during its next quarter, he added. The company gained a $3.9 million tax refund during the quarter, so next month's charge is effectively covered. It added the refund to its cash pile, which totalled $75.5 million at the end of the quarter.
Against Corel was $2.5 million worth of one-off charges related to its proposed acquisition by US-based Vector Capital - to which some shareholders are opposed claiming its offer undervalues the company - other severance payments and the strength of the Canadian dollar against other currencies.
Burney's goal, he reiterated, is to bring Corel to profitability this year.
Corel's core graphics and office productivity divisions yielded the biggest contributions to the bottom line - $14 million from the Graphics Solutions unit and $11.2 million from the other. But despite launching a raft of updates to its product line, Graphics Solutions' revenue fell 15.6 per cent year-on-year and 8.6 per cent sequentially. Corel blamed its failure to get the Simplified and Traditional Chinese, and Korean versions of CorelDraw out the door. It didn't sell so well in Germany, either. WordPerfect Office sales were up, boosting that units sales 33 per cent year-on-year and 66.6 per cent sequentially.
But Corel sounded a warning: while sales of WordPerfect Office were up, the increase isn't in line with the boost seen when the suite has been updated in the past.
Corel's XML Solutions division saw sales increase 46.6 per cent year-on-year to a mere $456,000. Of greater concern is the 60 per cent sequential decline. The Process Management Solutions division posted sales of $2.2 million, fractionally down on last quarter and down 11.2 per cent from this time last year. ®