Corel founder Michael Cowpland resigned late yesterday as chief executive, chairman and president of the company amid continuing financial woes, lagging sales and a failed merger.
In early trading,
Cowpland is stepping down from the top spot at the Ottawa, Ontario-based software maker to pursue start-up opportunities, according to a statement from the company. Derek Burney, most recently executive vice president of engineering and chief technology officer at Corel, has been appointed interim CEO and president.
Although Cowpland will no longer be involved in active management of the 15-year-old company, he will stay on as a director on Corel's board and as a technology adviser.
Gartner analyst Chris Le Tocq blames Cowpland for Corel's many missteps in the marketplace.
"All in all, it's been Cowpland's company, and maybe it's time for him to move on," he said.
Yesterday's announcement, which took place after the markets closed, is the latest turn of events for a company known for dramatic personality changes. Originally a company that focused on graphics software, Corel later tried to move into office applications by buying WordPerfect. A few years ago, it tried its hand at Internet appliances and network computers. As part of that effort, it released a Java-based office application suite.
Most recently, it has tried to place itself at the front of the Linux movement. However, like the office application push, Corel's Linux efforts are meeting muted results. Analysts and programmers have praised Corel Linux, the company's version of the Linux OS. But the product is not selling well. In recent quarters, the company has posted losses and declining revenues.
At least one analyst said Cowpland's biggest mistake was his decision to concentrate all the company's efforts on the emerging desktop Linux market.
"Corel essentially bought the farm with moving applications to Linux, and the Linux desktop marketplace has not appeared," Le Tocq said. "And who knows if it will ever get on stage. The Linux desktop market is a non-starter in the United States."
Last year, the Ontario Securities Commission charged Cowpland with three counts of insider training. Cowpland has denied all allegations.
According to Reuters, Cowpland in a press conference yesterday denied his resignation had anything to do with the charges but added that there has been no resolution of the case.
Cowpland's resignation came on the same day Sun Microsystems announced plans to open the source code of its StarOffice application suite. The desktop version of StarOffice, which is free and includes a word processor, spreadsheet and other programs, is popular among Linux supporters.
"That really put the capper on Corel's opportunity in the Linux marketplace," Le Tocq said. "That makes the market for Corel more competitive and a lot lower margin than it anticipated."
Le Tocq added the company is a good acquisition candidate for a business that wants to take Corel's software and rent it over the Web. "The company that acquires Corel could use the expertise within Corel and use it to build Web-based services," he said.
The company suffered a bitter setback in May when plans for a merger between Inprise, formerly known as Borland, and Corel were called off amid a stock slide for Corel. The merger would have given financially strapped Corel a $240 million infusion of cash. In June, Corel cut 320 jobs, or about 21 percent of its work force, as a direct result of the failed merger.
Corel had warned that it could run out of money in July if the merger failed or the company didn't secure more financing.
The company's stock was selling for around $20 in February at the time the Borland deal was announced but now regularly sells below $4. It closed yesterday at $3.66.
"I am looking forward to dedicating more time to start-up ventures in the Linux arena," Cowpland said in a statement. "It is exciting to see (that) major industry players like IBM, Dell and Hewlett-Packard are endorsing Linux on the desktop. This further validates Corel's pioneering efforts to deliver Linux to the mainstream.
"I will continue to work closely with Corel and its affiliates, and I have total confidence in Derek's ability to carry the company forward with vision, leadership and focus."
As interim CEO, Burney will take over management of the company and, with a committee, seek a permanent CEO. In addition, board member William Davis' resignation was announced yesterday. James Baillie and Larry O'Brien have been appointed to the board of directors.