Corel Corp has finally returned to profit with its fourth-quarter results, something chief executive officer Dr Michael Cowpland had been promising it would do since last summer. The Canadian software house posted net income of $6.8m, or $0.10 per share, on revenue up 54.1% at $67.2m, compared to a net loss of $66.9m in the year-ago period – which included an acquisition-related charge of $3.8m. The profit was Corel’s first since 1996 and came as a surprise to most analysts. Despite the company’s own predictions and politicking to the contrary, the consensus estimate on Wall Street had been for a loss of $0.02 per share. That discrepancy could largely be attributed to the fact that – as company officials freely admitted on a conference call to announce the earnings – many analysts had simply lost interest in the company over the past two years and thus are largely unaware of the company’s revamped cost structure. For the year, net loss was $30.4m on revenue down 5.3% at $246.8m, against a loss of $231.7m last year. Full-year results include a restructuring charge of $15.9m, while year-ago results include acquisition- related charges of $117.5m for the 12-month period. The fourth- quarter results show a leaner, more efficient Corel after restructuring efforts last year which pared the company’s staff by roughly one-third to 1,300 people, 600 of which are developers. Corel ended the quarter with cash and short-term investments at $24.5m, up from $19.9m at the end of the third quarter, while accounts payable and accrued liabilities declined by $4.2m sequentially and long-term debt was cut by a further $2.5m. Days sales outstanding remained at 60 days, down from 107 days in the year-ago quarter. The company proudly points out that its turnaround was also achieved in a year which saw no new release of either of its two flagship products, CorelDraw and WordPerfect. Both products are slated for updates in the second quarter and Corel says it should be looking at a more robust sales year overall, although no specific guidance was given. But because those releases are just around the quarter, the company is expecting the current quarter to be the most challenging of the year. Coinciding with its divestiture of the NetWinder hardware unit (see related story), Corel says it will remain solidly focused on its core businesses of productivity and graphics software. It hopes to better leverage an installed base of about 50 million users, which currently generates only a 15% uptake in new releases. The company also claims to have increased its WordPerfect installed base in the US by 10% last year to 22 million users, even in the face of pressure from Microsoft Corp.
