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Market shrugs off Corel's latest product launch

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CIOL Bureau
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Susan Taylor

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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

Francisco.

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"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.

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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.

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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.

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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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