Wary Inprise Jilts Corel

BOSTON (05/20/2000) - The collapse last week of the merger pact between Corel Corp. and Inprise Corp. left Corel without a much-needed source of funding and Inprise with a lot of elated Windows application developers and programmers.

Angelo Serra, enterprise application developer at the Ohio Department of Transportation in Columbus, said the merger wasn't viewed favorably by the developer community.

"Corel is a sinking ship, and [developers] wondered why Inprise was tying itself to the wrong company," given Corel's financial woes and the lack of product synergy, said Serra, who uses JBuilder and Delphi tools from Inprise.

Ottawa-based Corel's focus is on the Linux operating system, while Scotts Valley, California-based Inprise's customers are Windows shops.

The proposed merger has been on shaky ground since it was announced Feb. 7.

Corel had potentially snagged Inprise for $2.44 billion in stock, but the value dropped as Corel's stock plummeted on the heels of its $12.4 million first-quarter loss and expectations of future losses.

Inprise asked Fort Lee, New Jersey-based financial adviser Broadview International LLC to re-evaluate the merger's "fairness" last month. Corel warned that it would run out of funds by July if the deal fell through and left it unable to rely on Inprise's coffers.

Analysts said Inprise was left with no choice but to end the merger.

Most such deals last year worked because the companies' products were complementary, said Rikki Kirzner, an analyst at International Data Corp. in Mountain View, California. For example, Sun Microsystems Inc. last August bought Forte Software Inc., a maker of development tools in Oakland, California, to expand its development offerings. "It was like trying to put a square peg into a round hole for [Corel and Inprise]," Kirzner said.

Now that Inprise is free of Corel, some analysts and users say Inprise will accelerate development of its wares. Serra said Inprise expanded its beta offerings to his department, but he declined to be specific.

However, Carl Zetie, an analyst at Giga Information Group Inc. in Santa Clara, California, said Inprise is on its last legs. "It took a full-court press to publicize itself as a Linux vendor, and now [Inprise] has a credibility problem," Zetie said. "What will it say now? ‘What? We're kidding around.'" He predicted Inprise will sell itself off in parts.

But several Inprise users insisted the firm will survive. "I have no intention of switching from the best Java development tool on the market," said Ben Matterson, a JBuilder developer at OpenAvenue Inc., an open source code online development firm in Scotts Valley.

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