Corel draws a profit

Corel has stunned analysts by recording a profitable fourth quarter, despite earlier predicting a loss for the period ended 30 November.

Corel has stunned analysts by recording a profitable fourth quarter, despite earlier predicting a loss for the period ended 30 November.

The software vendor's Q4 profit was $4.6m (£2.8m), compared with $6.8m in the same period in 1998. Turnover during the quarter reached $60.9m.

For fiscal 1999, Corel's profit was $16.7m on turnover of $243.1m.

In December, the company warned that it expected to report a Q4 loss of 14c per share on $61m in sales and a profit of only 5c per share for fiscal 1999.

But since last month's gloomy prediction, Michael O'Reilly - former chief financial officer of the company who resigned last month but will stay on until 30 June - was able to recognise tax values of certain losses and investment tax credits. The tax had been deferred pending the outcome of a review of the company's 1993 to 1995 taxation years.

Although Corel's Q4 results were still hit by lower-than-expected sales, company officials are confident that the Linux wave will help Corel this year.

Michael Cowpland, chief executive of Corel, said: "It should now be clear to everyone that Corel is financially among the top Linux players. There is tremendous promise for the launching of our Linux application suites in the next few months."

However, the better-than-expected financial results do not mask Corel's other potential problems, including the accusations against Cowpland of insider trading by the Ontario Securities Commission.

The charges relate to trading activity during August 1997, when Cowpland unloaded $20.4m in Corel stock shortly before an unfavourable earnings report.