Corel issued a profits warning for its first fiscal quarter on Thursday, after claiming that sales had been hit because of the maturity of both of its flagship product lines.
The Canadian software company surprised analysts by saying it expects to report revenues 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 approximately $0.24 per share compared with losses of $0.36 per share in the year ago quarter.
Wall Street had thought that Corel would break even for the quarter and the First Call analyst consensus estimate even predicted a $0.03 cent profit. Its shares fell almost 30 per cent on Thursday to close at $2.67 on the news.
Michael O?Reilly, Corel?s executive vice president and chief financial officer, 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] through Q1."
He added that although the company had expected a weak quarter, 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 very end of the company?s fiscal second quarter.
Corel also announced on Thursday that Don Sylvester, its executive vice president of sales, was leaving the firm, but refused to elaborate on whether his departure was linked to the sales shortfall.
Over the last few years, Corel has ventured outside its core market of graphics software and desktop productivity software for Windows, but has fared badly.
It launched a largely unsuccessful range of consumer multimedia products, developed a Java version of its desktop suite, which never shipped, and even launched a family of Linux based Network Computers. In January, however, it sold off its hardware division to Hardware Canada Computing.
The firm is now currently porting its entire software portfolio over to Linux in an attempt to compete against Microsoft, and announced at Linux World in San Jose two weeks ago that it would sell its own version of the Linux operating system later this year.
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