Corel follows Microsoft deal with CEO decision

Now that the company is back to life, Corel has elevated Derek Burney to president and CEO of the company on a permanent basis.

The Ottawa-based software developer yesterday surprised the computing world by announcing that rival Microsoft had invested $135 million in the struggling company as part of an alliance to promote Microsoft's .Net strategy.

Has Microsoft saved Corel? Corel CEO Burney

The Microsoft announcement has sparked Corel's stock today. Corel shares closed up $2.09 to $5.78, a jump of 56 percent. The company's stock had traded as high as $7.13--a 92 percent jump--after Microsoft said yesterday that it would buy 24 million non-voting shares at $5.625 each.

Burney had been serving as interim president and CEO since August, when founder Michael Cowpland abruptly resigned as CEO.

Burney was clearly central to the Microsoft deal. Microsoft general manager Tom Button said the seeds for the deal with Corel were planted when he sent Burney an email after Burney was named interim head of Corel.

Corel is already looking for ways to take its programs--including Corel Draw, WordPerfect and Corel Linux--onto the Web, Burney said. The goal of Microsoft's .Net is to allow services and software to be accessed by a variety of electronic devices over the Web.

"We've seen the Web as a place where we want to put a phenomenal amount of effort," Burney said. "This alliance is going to make that really work."

As part of the deal, Microsoft and Corel said they were settling any remaining legal issues, although executives refused to identify what those issues were and said the companies were not involved in any litigation currently. In the past, Corel has often set itself up as a competitor to Microsoft, releasing operating systems and applications that compete with similar products from Microsoft.

Burney said yesterday that he hoped the deal would put to rest any financial concerns about Corel.

Financial health has been a central problem for Corel. The company has suffered losses in recent quarters and failed to gain much in market share. Following the collapse of a proposed merger with Inprise in May, Corel has laid off a number of employees.

Along with making Burney's position permanent, the company elevated four other executives to executive vice president.