Corel shows small profit, revenue outlook cloudy

Applications vendor Corel expects to report first-quarter net income of US$500,000, but the company's expected revenue of $32.5 million for the three-month period will fall short of internal expectations, the company said on Thursday in a statement announcing preliminary first-quarter figures.

By attaining positive net income in the first quarter, the company will reach profitability two quarters ahead of schedule, but the uncertain economic conditions make it unclear if Corel will be able to sustain the profitability in the second quarter, the company said. The company blames the expected first-quarter revenue shortfall on the US economic downturn, coupled with a steeper than expected decline in revenue from its business applications.

Costs of sales and operating expenses for the first quarter ending February 28 are expected to be between $33 million and $34 million, resulting in a loss from operations of $1.5 million. This is a dramatic improvement compared to the same time last year when Corel had costs of $62.8 million and $18.7 million in operating losses.

Interest income is expected to offset the $1.5 million operating loss and yield the $500,000 in net income, Corel said.

In recent months, Corel has announced that its main revenue engines will be Corel Draw and other graphics tools. The company's flagship WordPerfect suite of office software is no longer trying to go head-to-head against Microsoft 's Office software. Rather, Word Perfect is being aimed at untapped markets within companies that already use the WordPerfect package, the company has said.

Corel is collaborating with Microsoft on software development for the Internet-based .Net initiative. Microsoft in October of last year invested $135 million in Corel.

Corel shares (CORL) traded up $0.12, or 6.25 percent, to $2.12 a share in morning trading Thursday.

Corel executives will hold a teleconference on March 29 at 5 p.m. EST to discuss the company's final and official first-quarter financial results. To participate in the teleconference, media and analysts should call +1-416-695-5801Corel, in Ottawa, Canada, can be reached at +1-613-728-8200 or http://www.corel.com/.

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