Dow Jones 7974.82 -38.47 12:10 pm PST, February 5, 2003  NASDAQ 1299.74 -6.41 For info, visit access.smallcapnetwork.com S & P 500 842.90 -5.30 To be removed, please click here Russell 2000 366.14 -2.58 VOLUME 02: ISSUE 95 Spell "Optimism": C-O-R-E-L It appears that just about everyone has abandoned beleaguered software company Corel (CORL: NASDAQ). At First Call, only one or two analysts even bother to post projections and the stock is banging around 80 cents, a slight uptick from its 52 week low of 62 cents.  CEO Derek Burney states that fiscal 2003 will represent the year when Corel returns to profitability, at least on an EBIDTA (Earnings Before Interest, Taxes, Depreciation and Amortization) basis. For 2002, the company lost 36 cents a share before write-downs. Include everything and the company lost a net $1.09. Corel's net loss for 2001 was a dime. The limited analysts' projections at First Call have the company losing 4 cents for 2003.  Saying it doesn't necessarily make it so. A purchase now or around this price will likely be an all or nothing proposition. Gone-thankfully-- are the heady days of the bubble when previous CEO Michael Cowpland stated the company's shares would be a currency for acquisition. Also gone is a clear business direction. By the end of 2003, Corel not only needs to return to profitability, but delineate its strategy in a crowded, economically challenged sector.  The only thing that's certain is that 2003 will be a watershed year for both Corel and Burney. The company needs a blockbuster application.  Just saying that 2003 will be a good year won't necessarily make it so. "We are committed to growing our revenues and running our business profitably in 2003, regardless of the prevailing economic climate", says CEO Burney. An odd turn of phrase as, unless I am reading this statement incorrectly, it seems that disregarding the prevailing economic climate has been the problem to date. I have seen few other, if any companies that have taken this approach. Shouldn't one develop a strategy based on the prevailing economic climate? Isn't that what savvy management is all about? Burney has declined to give any substantive guidance for 2003 beyond the above. Corel started its long slide from a peak of $30 plus per share in the first quarter of 2000-granted, along with everything else-to a level of sub 80 cents. Revenues declined 18 percent, from $157 million in 2000 to $130 million in 2002-not catastrophic in the whole scheme of things, but should be of concern to investors nonetheless.  Accentuate the positive....? Now the good news. Corel seems to be realigning its enterprise strategy, has no long-term debt and has cash and equivalents worth around $77 million. While below fiscal 2001's level of $122 million, the current level of cash is still comforting. The company has downsized over the last year by reducing its workforce by 22 percent. It seems, too, that the company is going to focus more on its flagship CorelDraw and WordPerfect products. Burney looks to these products to fund the R&D into new enterprise solutions. Hopefully this will work for Corel; it will stick to its core businesses and we'll see an end to the days of abortive Linux initiatives and the on again off again support of Apple applications.  Eliminate the negative...? There are scads of companies out there that represent a riskier investment than Corel. The trick shot will be whether Burney can entice investors to look anew at the shares. Previous investors are likely gone or shell-shocked, but at less than 80 cents, there are bound to be those willing to take a flyer. With 92 million shares outstanding and a stack o'cash (and equivalents), some shares might have a place in the all or nothing portion of a portfolio. Some good fundamental news would likely be viewed positively by the market with the shares at this bombed out level. At the moment, it's a potential trade. Time will tell if Corel returns to being an investment. A wise businessman once said, "Don't confuse motion with progress." D I S C L A I M E R : The SmallCap Digest is an independent electronic publication committed to providing our readers with factual information on selected  publicly traded companies. SmallCap Digest is not a registered investment advisor or broker-dealer. 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