Kris Hagerman, Corel (photo supplied)

Corel Corp. got back in the black in its second quarter, but the design software company posted weaker-than-expected numbers in its first reporting period after the departure of David Dobson from the top role at the company.

The Ottawa-based firm said sales rose by 3.1 per cent to $67 million, trailing the company's previous estimate of $66 million to $68 million for the quarter, with growth slowing from the preceding four quarters' double-digit paces.

As well, profits declined to $930,000 or four cents per diluted share, at the low end of its previous guidance, from $2.3 million or nine cents per share a year earlier.

Non-GAAP adjusted net income also dropped to $9.5 million or 36 cents per diluted share from the year-earlier profit of $9.8 million or 39 cents per share, although the profit was an improvement from the previous quarter when a net loss of $30,000 was recorded.

The company's weaker revenue growth was due in part to a decrease in sales of digital media products including its recently acquired InterVideo and Ulead brands, which fell to $28.5 million from $30.5 million. The division accounts for 42.6 per cent of total revenues.

However, interim CEO Kris Hagerman focused on the strength of the company's diverse brands and its continued profitability.

"We continue to successfully execute our core strategy, which is to drive profitable growth by pursuing opportunities in faster-growing markets, while delivering consistent growth and profits from our more established product lines and channels," said Mr. Hagerman in a statement. "As Corel's results for the second quarter illustrate, we continue to benefit from our highly diversified business model."

Mr. Hagerman, a former senior adviser at Vector Capital, took over in May following Mr. Dobson's announcement that he would be taking on a senior executive position at another company. Vector Capital is trying to take Corel private for the third time, offering US$11 per share at last count, having once taken the company private in Sept. 2003.

The company lowered its profit expectations for the fiscal year to between $8.5 million and $13.5 million, or between 30 cents to 50 cents per share, compared to its previous guidance of $9.5 million to $15 million, or 34 cents to 55 cents per share.

However, revenue expectations were maintained at $263 million to $275 million.

For the third quarter, Corel is expecting revenues of between $63 million and $65 million and profits of between break-even and $1.6 million, or per-share earnings of zero to six cents.