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Corel Still Runs in the Red

Software vendor says a Linux-based future will bring profits.

By Jack McCarthy, IDG News   

The software vendor on Monday announced a net loss for the first quarter and warned that results in its next two financial quarters are likely to be the same as Corel moves its focus from selling Windows-based products to systems running on the open-source operating system Linux.

Corel on Monday announced a first-quarter net loss of $12.4 million, or 19 cents per diluted share, compared with a net loss of $14.6 million, or 24 cents per share, for the year-ago quarter. Revenue for the first quarter, which ended February 29, reached a record $44.1 million, compared with $40.3 million for the same period last year, Corel said in a statement.

"Corel continues to be in transition between being the legacy of Windows to the exciting opportunities ahead," Michael Cowpland, president and chief executive officer of Corel, says. "We are excited we can deliver Linux platforms to the mainstream."

As part of its push further into the Linux world, Corel also announced that it will begin shipping its WordPerfect Office 2000 suite for Linux on Tuesday. The standard edition is priced at $109 and the deluxe edition at $159. Since their release last year, Corel's WordPerfect 8 for Linux has had more than 1.5 million downloads, and the vendor's Linux OS has had over 200,000 downloads from the Web, the company says.

Cowpland also says Corel plans to make use of its proposed merger with Inprise/Borland to develop more Linux-related applications and services. "We expect to do very well in the overall Linux market," he says. Cowpland adds that shareholders for both companies will vote on the proposed merger in late May.

For the first quarter of fiscal 2000, Corel had $2.3 million in sales from its Linux OS, down from $3.2 million in the previous quarter. However, Linux-related sales should reach $20 million by November this year, Cowpland said.

One analyst said Corel will have to step up its efforts to integrate Linux into its existing products. "The future will depend on how Corel products, particularly graphics [offerings] like CorelDraw, are accepted by customers," says Bonnie Brooks, an analyst with Creative Strategies, based in San Jose, California.