Corel outlines strategic roadmap

Although they are not expecting profits for another year, Corel Corp. executives on Wednesday outlined a three-point initiative they hope will deliver the company to profitability by 2003. The elements include the segmenting of the market according to key customer profiles, strategic investing to gain footholds in new markets, and developing solutions for emerging markets, company officials said.

Speaking on a conference call to reporters and analysts, Corel president and Chief Executive Officer Derek Burney said the company's future business will focus on leveraging the company's existing technology assets, which include internal assets and those it has acquired, most notably Micrografx and SoftQuad.

Corel will also make significant investments in higher-growth emerging enterprise-class markets, including technical illustration, EPM (enterprise process management), and XML (Extensible Markup Language) content solutions.

"These investments will impact our bottom line in the short term, but we are confident [they] will pave the way for significant growth over the long term," Burney said.

Looking forward into 2002, Burney said he believes Corel can realize total revenues of between US$170 million and $180 million, an unspecified increase over revenues in 2001. But despite these advances, the added investments Corel will have to make to be a player in the emerging markets will result in a net loss of between $23 million and $31 million.

"In fiscal 2002 we will be making strategic investments to support our entry into higher-growth markets while we build our equity in key customer segments," said John Blaine, Corel's chief financial officer.

The six key customer segments Corel will focus on include Prosumer, where the company will sell its Corel Draw product; its recently delivered Procreate series, which includes its premium brand of graphics products; the business, government, and legal markets, where its WordPerfect desktop suite will be aimed; EPM, where its Six Sigma product will be sold; and the technical illustration and professional graphics markets, where a number of its products will be sold.

Reviewing the year 2001 and the promises it had made as part of its three-horizon strategy outlined in January, Burney said the company accomplished all of its stated goals for the 3-to-12-month Horizon One stage. Those goals included selling off its Linux desktop operating environment business and delivering all key products for the Windows and Mac OS X operating systems on time.

He believes the company remains on track for accomplishing the goals set for a one- to two-year time frame by delivering revenues from investments made in Internet and XML-based technologies. He also believes the company can accomplish the goals set for two to three years out, where the company will have underway strategies and products aimed at wireless market and Microsoft's .Net initiative.

Over the past year Corel acquired Micrografx and SoftQuad. The products and assets of both will play significant roles in helping Corel drive itself back to profitability.

Burney said he expects the acquisition of SoftQuad to be completed before the end of the first quarter of its fiscal year, which ends Feb. 28, 2002. Both companies are currently awaiting the regulatory approval of the required filings and continue to work on details of a complete integration plan.

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