Corel Posts Poor Fiscal Results for Q1 2009

On April 2 2009, Corel revealed a summary of the financial results for the first quarter of this year, which ended on February 28, indicating that revenue dropped to $56.2 million. The preliminary report shows that, at the beginning of 2009, revenue decreased no less than 14% compared with the same period of the past year. In the first fiscal quarter of 2008, Corel managed to draw in $65.5 million. Obviously, like many other firms in the software industry, it feels the repercussions of the global economic crisis.

Kris Hagerman, Interim CEO of Corel, said that "Despite the solid execution of our global teams during the first quarter, we clearly felt the effects of a deep and persistent global economic slowdown." He added that "We remain convinced that, through disciplined financial management and a commitment to delivering innovative products that drive real value for our customers, Corel will emerge from this difficult period financially sound and in an even stronger market position."

Corel’s $56.2 million in Q1 2009 are equivalent with a Generally Accepted Accounting Principles (GAAP) net loss of $1.5 million. The company also lost money in Q1 2008, but 50 times smaller than the current GAAP net loss, namely just $30,000.

Being afloat in the global economic tsunami for Corel will mean implementing cost reduction measures in the second fiscal quarter of the year. According to the company, the strategy is to cut down on staff expenses. While it has not announced that jobs would be at risk, Corel will reduce the salaries of all senior executives by 10% and will force employees to take five unpaid days off. This move would produce an estimated $2 million in operating cost savings by the end of fiscal 2009.

Kris Hagerman also stated that "While these decisions are never easy, our goal is to maintain a strong financial foundation to pursue our business strategy, while doing our best to minimize the impact on our employees."