Corel Corp warned Wednesday that it will report a surprise loss for its fourth fiscal quarter ended November 30 as retail sales of Windows-based products came in lighter than expected. The Canadian software company said it expects to post a loss for the period of roughly $0.14 per share, when analysts surveyed by First Call were looking for a profit of $0.12.
In the year-ago quarter, Corel posted positive earnings of $0.10 in what was then a surprise return to profitability after a string of quarterly losses. Revenue for the fourth quarter will come in at about $61m, down from $67.2m in the year-ago quarter and $71.3m in the preceding quarter.
On a conference call with analysts, the company said that sell- through of Windows products was surprisingly lower than expected, forcing it to take an extra reserve against the $77m in products that it actually sold into the channel. Company executives attributed the shortfall to an overall slowdown in the retail software market due to Y2K concerns.
Detailed analysis of channel sell-through necessitated taking substantial reserves on a number of product lines. This resulted in a reduction of reportable revenue, said Michael O’Reilly, Corel’s chief financial officer. We also appear to have incurred higher than anticipated costs in some of the company’s operations and activities during the quarter.
While we are disappointed by the preliminary results for the quarter, we are pleased that we are still able to deliver a profitable year, Corel CEO Michael Cowpland said. For the full 1999 fiscal year, the company expects to report overall net income of approximately $0.05 per share – thanks to strong results in the second and third quarters. Corel officials said they would not be comment further on the financial issues until the release of the final results for the quarter, scheduled for January 18.
