Corel Corp has announced that it has reduced its workforce by 220 employees, approximately 22%, as it aims to become profitable and generate positive cash flow. The Ottawa, Canada-based graphics and office software vendor said the cuts would affect all departments and enable it to reduce its payroll costs by around $12m per year.
The reduction will also result in a one-time restructuring charge between $5.8m and $6.3m, which will be incurred during the company's current fourth quarter, with the cost savings being realized in the first quarter of 2003. The company's president and CEO, Derek Burney, said Corel expects growth in 2003 but is taking a conservative approach and realigning its cost structures to reflect current revenue generation.
Corel, which now has 769 employees, has had a mixed 2002. The company has won major contacts with Dell Computer Corp, Hewlett-Packard Co, Gateway Inc and Sony Corp that saw its desktop productivity software installed on the hardware vendors' desktops and/or notebooks instead of Microsoft Corp's software.
Despite those high-profile deals, the company has struggled financially. Its latest, third-quarter results saw revenue drop 8.5% on the year to $31.3m. The company's net loss stood at $59.1m in the quarter ending August 31, compared to a profit of $500,000 in the same quarter last year. For the year to date, the company's revenue dropped 9.2% to $93.2m. The net loss for the nine months was $68.6m, compared to last year's $3.4m profit.