Crisis at Corel?

When Corel's proposed merger with Inprise collapsed last week, the company might have lost its lifeline.

"Corel is clearly in a cash crisis," said Carl Zetie, an analyst at Giga Information Group in Santa Clara, California.

He cited circumstances stemming from a poor financial outlook and Linux products that are unproven compared with those of rival Red Hat in Durham, North Carolina.

The decision to terminate the merger was "mutual" due to "significant changes" over the past three months, said Corel CEO Michael Cowpland. Corel chief financial officer John Blaine said the company is looking at alternative financing offers, but he repeatedly declined to elaborate.

David Wright, an analyst at BMO Nesbitt Burns, said he doubts Corel will find more financing but added that it will at least save money if it sells off unsuccessful product lines, including its Linux products, or if it sells its shares in GraphOn Corp. in Morgan Hill, California.

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