Canadian software developer Corel has issued a profit warning after revealing that it will be forced to write off $113.7 million in technology assets in its second quarter results.
The company has put the shortfall down to a decrease in demand for the Wordperfect product, which it acquired from Novell 18 months ago. Its results will be issued on 23 June.
About $104.9 million of the charge relates to a reduction in the value of the Wordperfect suite.
Corel will write off 60 per cent of the value of the Wordperfect acquisition from $161.8 million to $56.9 million and take a second quarter loss.
In a statement, Corel CEO Michael Cowpland said: ?As a result of the increased functionality of Corel Wordperfect Suite 8 since the acquisition of the software and increased R&D effort directed at Java, the company reassessed the carrying value of the original technologies from Novell.?
Corel believes the enhancements made to the version of Wordperfect it acquired will contribute more to revenue than the original product acquired from Novell. Corel said it was accelerating research into the Java-based version of its Corel Office suite, which will ship in the autumn.
The remaining $8.8 million of the charge represents the write-off of deferred development costs in the form of advanced royalties paid to developers of multimedia CD-Roms.
Corel?s UK channel partners were optimistic about the enhancements Corel has made to the Wordperfect product since it acquired the original product from Novell.
Jan Lawford, director of vendor and marketing communications at distributor CHS Electronics, said: ?Our Corel sales have improved quite dramatically over the past six months.
?It has become a very productive part of the business.?
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