Corel mulling sales of its Linux line

Susan Taylor

OTTAWA: Shares in Corel Corp. slid by as much as 5 per cent on Monday after

the struggling Canadian software developer said it may sell its Linux product

line in a corporate review of operations.

Corel, best known for its WordPerfect and CorelDRAW software, whose sales are

slumping, entered the Linux sector last year saying it promised a substantial

new revenue stream.

Linux is an alternative computer operating system to Microsoft Corp.'s

market-dominating Windows.

Corel's former chief executive, Michael Cowpland, who resigned from the

company in August, had predicted Linux sales of US $20 million this year. Corel

has sold US $6.1 million in Linux products in the past nine months.

Corel said as part of a recently started corporate review that its Linux

business unit must be bigger to be successful.

The company is considering an acquisition of technology to add to the Linux

unit, or its sale, a spokeswoman said. A decision will be announced in December

or January.

Corel is reviewing all of its operations in a push to return to profit, said

spokeswoman Anne Vis, and Linux represents just one element of the company's

business.

The company cut 21 per cent of its staff, or 320 employees, this summer as

part of a move to save US $40 million annually.

Linux is an open-source operating system that supporters claim is more stable

and flexible than Windows.

Corel has developed a range of Linux products, including a desktop operating

system and Linux versions of its software products.

Former market darlings, Linux firms now face hard times. Most recently, VA

Linux Systems Inc. warned its first-quarter sales would suffer due to widespread

failure from dotcom companies. Coupled with mediocre sales growth at Red Hat

Inc., analysts said that demand was not growing as quickly as hoped.

Corel, which had US $11.6 million in cash and cash equivalents at the close

of its third quarter, got a US $135-million cash injection from Microsoft in

October under a product development alliance.

Shares in Corel dropped as low as C $5.05 on the Toronto Stock Exchange on

Monday before rebounding to C$5.20, a drop of 15 Canadian cents, in afternoon

trade. Stock in Corel peaked at C $64.65 last December amid a Linux frenzy in

the markets.

On Nasdaq, Corel stock dipped to US $3-5/16, a loss of 2/16.

(C) Reuters Limited 2000.