As Corel announced third quarter figures that lived up to its earlier profits warning, it sold off its design products to specialist software house IMSI in a stock and cash deal.
In a move that will help Corel's fight back to profit and allow it to focus on its core Windows and Java office products, IMSI bought seven computer aided design (Cad) and consumer packages for $5.6 million in stock and cash, with further royalties and development payments to come, depending on the performance of the applications. Corel will also transfer 20 staff to a new development centre that IMSI is setting up in Ottawa, Canada.
Following a profits warning earlier this month, Corel's loss of $31.4 million or $0.47 per share came as no surprise. This compared with losses of $3.2 million in the same period last year, after a $10.4 million one-off gain on the sale of CD Creator, but the result was better than the $0.50 loss per share expected by many analysts.
However, revenues crashed by 34 per cent to $55.8 million, approximately half of the $100 million analysts had been looking for.
For the nine months, sales increased 19.7 per cent to 249.9 million, but losses increased 13-fold to $136.1 million from $9.3 million last time.
Michael Cowpland, trying to put a positive spin on the awful figures, said that after a period of extensive growth and restructuring, the stage was set for the company to return to profit next year.
The IMSI deal will be part of this process, and other officials reportedly suggested that the firm is thinking of cutting its advertising budget to $10 million from $20 million per quarter and reducing research and development expenses.
The products acquired by IMSI are Corelcad Modeler and Technical, Corelflow, Click & Create, Lumiere, Family Tree Suite, Family Publisher and Personal Architect. IMSI gets 70 per cent of its revenues from Cad.
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