Those who saw the success of Linux in the graphics market dependent on the success of Corel and its version of the OS got a major boost yesterday as the company released an unexpectedly upbeat earnings report, posting net income of 7 cents per share for its fourth fiscal 1999 quarter, after issuing a loss warning only last month. Corel said that it was able to recognize certain tax gains valued at US$14.5 million, which helped it to report net income of $4.6 million, or 7 cents per diluted share, for the quarter ended Nov. 30, as compared to net income of $6.8 million, or 11 cents per share, for the corresponding period one year earlier. However, revenue for the quarter dropped to $60.9 million from $67.2 million in the fourth quarter of fiscal 1998. The profit was surprising, since Corel had issued a warning on Dec. 22 saying that it expected to post a loss of 14 cents per share for the quarter. The loss expectation was shared by a consensus estimate from three analysts polled by First Call/Thomson Financial. Lower-than-expected sales of Corel's productivity applications, mainly in North American retail channels, had an adverse effect on revenue during the quarter, the company said in a statement. Sales of the company's newly released version of the open-source Linux operating system got off to a good start, however, garnering revenue of $3.2 million for the quarter, Corel said. For the full fiscal year 1999, Corel reported net income of $16.7 million, or 26 cents per share, as compared to a net loss $30.4 million, or 51 cents per share, for fiscal 1998. Revenue was down slightly, reaching $243.1 million, from $246.8 million for the previous year.