Ax finally falls -- hard -- on Corel

Corel (corl) shares closed off 7/32 to 5 1/32 ahead of the announcement.

Investors probably saw this coming in late May, however, when Corel officials said it was looking for investors after its proposed merger with Inprise/Borland Corp. (inpr) unraveled.

At the time, Corel said it would need to reduce about $40 million in annual expenses.

"I wouldn't say this is bad news because the bad news was already out," said Jean Orr, an analyst at BlueStone Capital Partners. "They're a software company. Where else are they going to cut costs other than through layoffs?"

Last month, Corel caught a break when Canaccord Capital Corp. agreed to invest about $10 million with an option for an additional $20 million to help keep the software developer afloat.

CEO Michael Cowpland said he plans to not take a salary this year to help cut costs.

"This was not an easy decision to make," Cowpland said in a prepared release. "After much careful deliberation, the company concluded that these steps were necessary."

Corel said that it is in a quiet period and cannot comment further on the cost-cutting plan.

Last quarter, Corel disappointed its investors when it posted a loss of $12.4 million, or 29 cents a share, on sales of $44.1 million.

"At the time, they told us that they didn't think the revenue outlook would improve in the second or third quarters," Orr said. "This has been a sword hanging over its employees' heads. At least now we know the numbers and what's going to happen."

Corel shares moved up to a 52-week high of 44 1/2 in December after hitting a low of 2 13/16 last June.

Both analysts following the stock rate it either a "hold" or a "sell."