Shortly after it acquired WordPerfect back in March last year, Corel Corp brashly predicted its sales, inflated with the software suite, would reach $490m in fiscal 1996, and $770m in fiscal 1997. It always looked like a hostage to fortune, and indeed it proved to be. Nevertheless, the relatively small Canadian software house and thorn […]
Shortly after it acquired WordPerfect back in March last year, Corel Corp brashly predicted its sales, inflated with the software suite, would reach $490m in fiscal 1996, and $770m in fiscal 1997. It always looked like a hostage to fortune, and indeed it proved to be. Nevertheless, the relatively small Canadian software house and thorn in Microsoft’s side beat Street estimates for its losses for the year, missed break-even by 1% and hit the consensus for the fourth quarter on the nail. Net profits for the fourth quarter were $6.5m, against losses last time of $956,000, on revenues that rose 102% to $125.4m. It should of course be remembered that those figures include WordPerfect. Of the total revenues for the quarter, $44.5m came from so-called ‘productivity suites’, of which 44% of that came from WordPerfect, which amounts to $33.5m. The rest of the suite revenues amounted to 20% for Office7 and 33% for corporate licensing. For the year, or at least the period since it acquired WordPerfect, it accounted for $76m in revenues, which is 2.9 million seats. President and CEO Michael Cowpland predicted growth in the current fiscal of about 30% to 40% with the spikes coming in the second and fourth quarters, but expects to be in the black in each quarter. Chief financial officer Chuck Norris said the consensus mean on predictions for the current fiscal is profits of 31 cents per share, which is about $18.6m on revenues of $447m. The flagship product is Corel Draw which accounted for $76.2m in the quarter, or 61% of the total, and 35% for the year. As well as relying on Corel Draw 7, which is now available, the company will launch WordPerfect Suite 8, Corel Office Professional 8 and WordPerfect 7 for Windows 3.1, with which it hopes to beat Microsoft around the head, going against Redmond’s Office97, launched today. But of course the real interest lies in what Corel is doing with Java. Corel Office for Java is due in April, as is the CorelVideo network computer. Corel’s may snuggle up closer to Sun as the latter is evaluating a 10,000 user license for Office for Java, according to Cowpland. Meaningful revenues are expected from the second quarter onwards from Office for Java, according to Cowpland. Net losses for the year to November 30 were $2.8m, after a $10.4m charge from the sale of the CD Creator software, against profits of $14.4m last time, as revenues rose 70% to $334.2m. Research and development costs in the quarter were 19.7% of revenues, up from 13.9% a year ago. Corel has to take a $15m hit each quarter for the next four and a half years, a vagary of Canadian accounting procedures, and the company is looking at switching to US accounting procedures, where it would take the charge as a one-off hit if it could, said Cowpland.