Would-be Microsoft challenger Corel is to cut one-fifth of its workforce following its sixth consecutive quarterly loss, and will merge its network computer subsidiary back into the main company.
The applications house will shut its Orem, Utah engineering centre where it develops Wordperfect Suite, transferring a skeleton team to its Ottawa headquarters. About 530 jobs will go in Orem by mid-August, but 150 will be transferred to or created in Ottawa. Development teams in Dublin, Ireland and New Hampshire will also be boosted by a total of 40 new positions.
Chief executive Michael Cowpland admitted it had taken over two years to absorb the engineering and business of Wordperfect into Corel. The product is still performing badly, say analysts.
The uncertainty surrounding Corel's commitment to its network computer hardware products heightened as the company reintegrated its NC spin-off, Corel Computer, back into the main corporation. The unit's chief will resign. Analysts took this as a sign that the NC strategy would be quietly forgotten though Corel still claimed it was "relevant to the strategy".
The company will take a $5.5 million one-time charge in its third quarter but aims to save $33 million a year with the cuts and the centre closure.
The move represents a U-turn by Cowpland, who only last month said he could not afford to cut "a single" R&D staff member.
The second quarter saw a loss of $8.3 million, significantly better than last year's $117.6 million Q2 deficit. Revenues fell from $87.4 million to $63 million however.
The company already faces several of the inevitable shareholder class action lawsuits following its string of losses, and now has a new one to fight - filed by 1950s screen star Hedy Lamarr. She is suing Corel for profiting from the use of her image on one of its products.
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