Corel Keeps Options Open in Fixing Financial Woes

As Corel Corp. looks for ways to return to profitability, no ideas seem to be off limits, according to a company spokeswoman.

"We are looking into every possible option," said Louise Hanlon, a spokeswoman for the Ottawa-based software maker. Everything from product lines to business units and business investments are being considered by the company's board of directors and executives, she said, declining to name specific proposals.

At last week's Comdex technology show in Las Vegas, Corel CEO Derek Burney reportedly commented that even the company's Linux operations could go if they would help put Corel back in the black.

But does that mean that Corel is ready to move away from Linux, which has been used to open up new markets for its existing software lines, including WordPerfect and CorelDraw?

"We're doing whatever is in the best interests of the company to return to long-term profitability," Hanlon said. And though Burney mentioned Linux as a possibility, it's only one example, she said.

A decision is expected by the end of this year or early next year, she said. So far, nothing is firm, she said.

Dan Kusnetzky, an analyst at International Data Corp. in Framingham, Mass., said he heard no specific talk about getting rid of Linux when he met at Comdex last week with company executives, including Burney.

"No one mentioned or hinted in even the slightest way that their Linux business was anything other than one of their primary strategic focus points," Kusnetzky said. "My impression was they were looking at ways to use Linux as a vehicle to deploy their personal productivity software, their graphics software and possibly even move up the applications stack into more enterprise-class applications."

Yet despite those observations, Kusnetzky said, it's possible Corel is considering such a deal and measuring what the impact would be.

One thing that could support such a move, he said, is the investment last month of US$135 million in Corel by Microsoft Corp. That alliance may put off some Linux developers, who might think that any ideas they offer to improve Corel's Linux products could make their way into Microsoft's hands, he said.

Chris Le Tocq, an analyst at Gartner Group Inc. in Stamford, Conn., said he's leery of the possibility that Corel could entirely rid itself of Linux as a fix for its monetary problems.

What is at least possible, Le Tocq said, is the idea that the company could sell off its Corel Linux operating system technologies, while keeping its Linux-based office suite and graphics packages.

"I think they're looking at costs and saying, 'Why do we need to be in the operating system business?'" Le Tocq said. He said he doesn't anticipate that Corel would contemplate getting out of Linux entirely, he said.

They couldn't do that because it would be problematic to give up products that work off their flagship code base for WordPerfect and CorelDraw, he said.

Corel has endured a number of shakeups in the past year as it struggled to turn around a string of poor financial quarters. The vendor has also laid off a number of employees in the course of this year, including the recent elimination of 139 jobs at its engineering operation in Dublin.

Burney was appointed the new CEO last month, replacing founder and longtime CEO Michael Cowpland, who resigned in August.

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