July 3, 2008 / 1:31 PM / in 9 years

Corel profit drops on one-time items

OTTAWA (Reuters) - Corel Corp CRE.TO said on Thursday that second-quarter profit fell 60 percent as it accounted for restructuring and buyout bid review costs without last year’s big income tax recovery.

Corel, a Canadian software maker which is mulling a buyout offer from its majority shareholder, said profit fell to $930,000, or 4 cents a share, in the quarter ended May 31 from $2.3 million, or 9 cents a share, in the same period last year.

Adjusted earnings slipped to $9.5 million, or 36 cents a share, from $9.8 million, or 39 cents a share.

That bettered the average analyst estimate for a profit of 35 cents a share before items, according to Reuters Estimates.

Revenue grew 3 percent in the quarter to $67 million as the Ottawa-based company sold more graphics, word processing and digital media software.

Operating under an interim Chief Executive after David Dobson resigned in May to take another job, Corel is reviewing an $11 per share buyout bid from private equity firm Vector Capital Corp. Vector already owns 69 percent of Corel’s stock and if its bid is successful, Corel would become a private company for the second time in 5 years.

Corel forecast third-quarter net income between break even and $1.6 million, or nil to 6 cents a share, and adjusted income of $8 million to $9.5 million, or 30 cents to 36 cents a share. Revenue is seen between $63 million and $65 million.

Analysts polled had expected earnings of 34 cents a share before items.

The company, which once waged a doomed battle with Microsoft to win the word processing market, sees full-year net income between $8.5 million and $13.5 million, or 30 cents to 50 cents a share.

It forecast adjusted income between $40.5 million and $46 million, or $1.50 to $1.70 a share, and revenue of between $263 million and $275 million.

The average analyst estimate for full-year earnings is $1.56 a share before items.

($1=$1.01 Canadian)

Reporting by Susan Taylor; Editing by Scott Anderson

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