Corel blames flagship kit for profit dip

Corel issued a profit warning for its first fiscal quarter last week, claiming sales had been hit because of the age of its flagship products.

The Canadian software developer surprised analysts by saying it expected to report revenue of $40.3 million on 24 March, compared with sales of $45.4 million for the same period last year. It also expects to turn in a net loss of about $0.24 per share, compared with losses of $0.36 a year ago.

Wall Street had predicted that Corel would break even for the quarter, with a $0.03 cent profit per share. Following the profit warning, its shares fell almost 30 per cent on 17 March to close at $2.67.

Michael O'Reilly, executive vice president and chief financial officer at Corel, said: 'In January, we stated that this quarter would be a significant revenue challenge. We knew we would be managing the very end of the life cycles of the current versions of our two flagship brands, WordPerfect Suite 8 and Corel Draw 8.'

He added that sales had slowed much faster than expected, but he hoped the launch of WordPerfect Office 2000 and Corel Draw 9 in the second quarter would return it to profitability. Neither products are expected to be in stores before May, however, which is at the end of the company's second fiscal quarter.

Corel also announced that Don Sylvester, executive vice president of sales, was leaving the company, but refused to confirm whether his departure was linked to the sales shortfall.