Corel declares loss; restates earnings

Corel Corp. today posted a net loss of $67 million for the fourth quarter, considerably less than the $95 million it had previously estimated.

The Ottawa, Canada company said the difference can be traced to a decision to write-off costs associated with acquired Java technologies over the entire year, instead of lumping it all into the fourth quarter. This will force the company to restate its previously announced earnings for the first three quarters of the year, the company said.

Sales for the fourth quarter were $43.6 million, down from $125.4 million in the previous year. For the year, the company reported sales of $260.6 million, down from $334.2 million, and a net loss of $231.8 million, compared to a net loss of $2.75 million in 1996.

"While the results for the fiscal 1997 year are disappointing, the Company remains strong and well positioned for a successful 1998," CEO Michael Cowpland said in a release, "In our continuing focus on core products, the company divested a number of product categories in 1997 that did not directly support our key graphics and business productivity software lines."

Corel (COSFF) warned investors in December that it would take a substantial loss in the fourth quarter, saying it was hurt by a move to lower the amount of inventory in the sales channel and by a write-off for "obsolete" inventory. The company said at the time that the moves would help reduce future costs by allowing more efficient inventory management.

This isn't the first time the company has had to restate figures, however. The company was forced to write off about 60 percent of the value of its WordPerfect suite, saying that Java-based additions to the suite meant it would have to "reassess" the value of the technologies it acquired from Novell when it bought the suite in 1996. Corel later scrapped the Java-based WordPerfect suite altogether.

In other woes, the company also learned today that Micrografx Inc. [MGXI] was seeking a temporary restraining order in the federal district court in the northern district of Texas. Micrografx claims that Corel misappropriated program features from its America Greetings CreataCard software in Corel's own Print House Magic product. Micrografx is asking the court to force Corel to stop using the features and to remove Print House from the marketplace until the features can be removed.