On The Heels Of Big Wins, Corel Cuts Staff

Despite deals with PC makers to push its WordPerfect office suite as an alternative to Microsoft Office, Canada-based Corel Corp. plans to cut about 22 percent of its workforce in an effort to be profitable.

Corel, which spent much of the last year in hibernation, said the layoffs would affect 220 jobs in all departments and would lead to payroll reduction in the range of $12 million annually.

The restructuring moves comes as a mild surprise, coming on the heels of high-profile deals with to put its office product suite on Gateway, HP and Dell desktop PCs.

With those deals, and an aggressive pricing strategy aimed at grabbing market share from Microsoft, Corel appeared to be making inroads by taking advantage of Redmond’s controversial licensing policy.

But, Corel is in belt-tightening mode because of the extended downturn in IT spending and what it described as “the persistently soft economy.” The company’s workforce now stands at 769 employees worldwide.

Corel said the cuts would lead to a one-time restructuring charge of between $5.8 and $6.3 million. “While we anticipate revenue growth for fiscal 2003, we are adopting a conservative approach in aligning our cost structure to reflect the company’s current revenue patterns,” Corel CEO Derek Burney said.

Corel, which also competes with Quark and Adobe, makes the bulk of its revenues from graphics and publishing software. In addition to its WordPerfect push with PC makers, the company is also busy hawking its Corel Draw illustration and graphic design software.