Market shrugs off Corel’s latest product launch

By : |August 30, 2000 0

Susan Taylor

OTTAWA: Investors took little notice on Tuesday as embattled Corel Corp.
launched the latest version of its flagship CorelDRAW graphics software with a
minimum of fanfare.

Corel, struggling with anemic sales and the recent resignation of chief
executive Michael Cowpland, also said its CorelDRAW 10 Graphics Suite would
carry some stiff price hikes when it hits store shelves in November.

There was little market reaction to a low-key press release from Corel about
the launch, which took place at the Seybold technology trade show in San

"Some of it is just concern about where the company is going now that
Mike’s not there, and this obviously isn’t going to mean an immediate uptick in
revenues or earnings," said Bluestone Capital Partners analyst Jean W Orr.
"It’s all bound together in terms of (the stock) not reacting."

Corel shares slipped 7 Canadian cents to end at C$4.91 on the Toronto Stock
Exchange and gained 1/32 to close at $3-5/16 on Nasdaq.

"Tied in with the product launch is usually some media hype and
advertising and things like that – so in general the markets have in the past
responded positively," said BMO Nesbitt Burns analyst David Wright.

Corel has dramatically scaled back such lavish launches. The company cut
one-fifth of its work force in June to trim about US $11 million from its annual
budget, but needs further slashing to meet its target of US $40 million in
annual savings.

Sales from the new graphics product won’t help the company in its third
quarter, which closes on Thursday, but will factor into the firm’s
fourth-quarter revenues. "I currently rate it (Corel) an underperform, I
think they’re going to have a tough August quarter," Wright said.

Corel said it expects to post third-quarter results in line with its second
quarter, when it announced sales of US $36.6 million, a drop from US $70.5
million in the year-earlier period.

The company said CorelDRAW’s second quarter sales of $17.2 million were down
from $26.7 million a year earlier and WordPerfect sales of $16.8 million slipped
from $43.8 million.

CorelDRAW 10 has a suggested retail price of $249 for an upgrade version and
$569 for a full version. In contrast, the suggested retail price for CorelDRAW 9
Graphics Suite upgrade version was $199 – 25 percent cheaper – and the full
version was $695.00.

"This is the biggest upgrade we’ve ever done for Draw and we’ve added a
whole new application," a Corel spokeswoman said, referring to a Web
animation feature.

The cost of the full version has declined because Corel said it is trying to
bring suggested retail prices in line with street prices.

Corel’s Web site offers the CorelDRAW 9 upgrade version for $189 and the full
version for $429.

(C) Reuters Limited 2000.

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