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Corel sells off hardware interests

The software applications company drops the curtain on its attempt to get into the hardware arena, announcing the sale of its line of NetWinder Linux machines.

Corel has dropped the curtain on its attempt to get into the hardware arena, announcing today that Hardware Canada Computing will buy Corel's line of NetWinder Linux machines.

The NetWinder experiment stands as one of the several gambles on trendy technology that the Canadian software applications maker has taken in an effort to distinguish itself from the pack and rise above a muddied financial picture.

A few years back, during the heyday of Java fever, Corel announced that it was going to produce an all-Java software suite. The Java strategy, however, has resulted in few tangible results. The NetWinder was birthed from the initial euphoria for network computing.

Nonetheless, the company has been an early, strong supporter of the Linux operating system, which is gaining market share.

Corel has been selling the product line since June 1998, but has a number of times considered selling its Corel Computer division, said Corel chief executive Michael Cowpland in a statement today. The NetWinder computers measure just 2 by 9.5 by 6 inches, and run Red Hat's distribution of the Linux operating system on Intel's StrongARM chip.

Corel signed a letter of intent to transfer the Corel Computer NetWinder division to HCC, an Ottawa-based builder and seller of Unix and Windows systems. The NetWinder products are a "key ingredient in [HCC's] entry into the Linux corporate operating system environment," the company said.

"Linux and open source code is the future," HCC President Michael Mansfield said.

Corel gave the NetWinder line to HCC in exchange for a 25 percent equity stake in HCC, Corel said. The agreement is expected to close by the end of February.

Although Corel got its start in the hardware arena with desktop publishing and graphics machines beginning the 1970s, the company now is centered around software products such as Corel Draw and WordPerfect.

Just last week, Corel announced the latest NetWinder product, an intranet and Internet server. Earlier products included a Linux developer's model and a Web server. Corel had planned to introduce a desktop NetWinder in February.

Also today, Corel announced that it has returned to profitability, reporting net income of $6.8 million, or 10 cents per share, for its fourth quarter of fiscal 1998. Those numbers compare to a net loss of $67 million, or $1.10 per share, for the same period last year.