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
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.