By Dominic Maher, 23 June 2000 00:30
NEWS Corel has warned that unless it finds the necessary cash required to meet its commitments, its ability to continue operating is in "substantial doubt". The statement comes after Corel reported a loss of $23.6m for the second quarter of this year, compared to a profit of $9.2m for the previous year's corresponding quarter. The results also show a drop in its cash reserve - down to $9.9m from $29.2m the previous quarter and approximately $80m in 1999. Corel's proposed merger with Inprise/Borland fell through earlier this year following a 65 per cent drop in the latter's share price - which was triggered by news of the intended tie-up. Corel's own share price suffered in the recent high-tech stock melt-down. Clive Longbottom, strategy analyst at Strategy Partners, said: "I don't see how Corel can claw their way back from where they are. The only product they have worth saving is CorelDraw and when you look at their Linux strategy there isn't much of a business model behind it and I don't really see how any of the existing Linux players would really be interested in what is there." Longbottom added that the falls seen on Nasdaq earlier this year sounded the death knell for the deal. He said: "This was a major turning point. The problem was the fall in Corel's stock price on the back of Wall Street and the technology stocks there. That is what suddenly drove the Inprise stockholders to say 'no, we're not going to get enough money for the business'. This was bad luck, not something Corel should have seen. However, the future is still very bleak." Rossana La Riviere, spokesperson for Corel, said: "We are currently working on different sources of financing to meet the companies requirements."
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