Within two months Corel plans to shut its Orem, Utah, engineering center, home of the poorly performing WordPerfect office suite unit and transfer some of the jobs to its Ottawa headquarters.
President and Chief Executive Michael Cowpland said it was "the ideal time to consolidate," suggesting that after the company bought Wordperfect in 1996 it may have bitten off more than it could chew. "It's been just over two years in order to absorb not just the engineering aspects, but all the aspects of the business," Cowpland said during a conference call.
Corel will chop 530 jobs over the next two months in Orem but create 150 in Ottawa, and 40 in New Hampshire and Dublin, Ireland, reducing its head count by 340 positions overall. For the past few months Cowpland refused to cut jobs, saying he needed every research and development staff member he had.
Corel hopes to save $33 million a year with the changes but will take a $5.5 million one-time restructuring charge, likely in its third quarter, executives said. Cowpland said his company would return to profitability very soon.
Corel's loss for its second quarter ended May 31 was smaller than expected, coming in at $8.3 million or $0.14 a share. That was much less than its year-ago loss of $117.6 million or $1.96 a share. The company trumpeted the fact that its latest loss was less than the average of analysts' forecasts, at about $0.19 a share, according to its calculations.
Even so, sales fell as well -- to $63 million from a year-earlier $87.4 million. Corel has fought a losing battle with Microsoft, the industry's leader, in the office software market after purchasing WordPerfect.
Add to that Corel's cash position being shaved to $17.3 million from a year-earlier $20.6 million and the company is clearly in trouble. Shares have been faltering in recent months as it posted loss after loss. At its April 15 annual meeting Cowpland, who is named in several legal suits, was challenged by some irate stockholders to keep his word about the company's return to profit.
The lawsuits allege that Corel, Cowpland and others had issued false and misleading statements, artificially inflating its stock price by misrepresenting the business. And a separate lawsuit, filed by former movie screen starlet Hedy Lamarr, alleges Corel profited by using a drawing of her image on one of its products.