THE DAY AHEAD: A few suggestions for Corel's board

Memo:
To: Corel's Board of Directors.
From: ZDNet Inter@ctive Investor
Re: Turning the company around.

This columnist would like to congratulate Corel on CEO Michael Cowpland's resignation. After a year of bad news, it's nice to see a positive development.

Given the litany of problems at Corel, it's time for new leadership. In fact, it was time for Cowpland to go a few years ago, but why nitpick? We're happy to hear he'll be focusing on startups, whatever that means. At least he's out of Corel's way (we do feel sorry for those startups though).

Although Corel watchers wish the board would have cut Cowpland before 20 percent of its work force, we'll take what we can get at this point. It's been a rough year -- the Inprise merger fell apart, Cowpland made numerous promises he couldn't deliver, and each quarter was a debacle. We won't even mention Cowpland's insider trading problems with Canada's securities regulators (oops, it slipped).

And despite Corel's ongoing entertainment value, this columnist a few months ago swore off writing about Corel until management changed. Well, management changed (finally), so here's some unsolicited advice.

1. Find a new CEO pronto. Although Cowpland is off to be flamboyant on his own time, he has left a big mess behind. Derek J. Burney, your former chief technology officer, may be a fine interim CEO, but he's no Steve Jobs. This interim tag better not become permanent. Find a big-name CEO that can string together four solid quarters. The new leader's first job will be boosting morale.

2. Appoint God, Bill Clinton or a good counterfeiter as CEO. As you inevitably know by know (or at least we hope you do), Corel is low on funds, morale and anything resembling fiscal discipline. If you appoint God as CEO, he should be able to handle any problems the company has. We can see the God vs. Gates headlines now. In the event God isn't available, we'd suggest Bill Clinton, who will be job hunting soon. The president has great contacts, can schmooze with the best of them and can even balance a budget. With some practice he may even learn the words to "O'Canada." And if neither God nor Clinton is interested? Hire a good counterfeiter -- he'll at least be able to handle that pesky cash problem.

3. Consider going private. Let's face facts. Corel shedding its history is almost impossible. Cowpland's stamp is all over this puppy. Why not take the company private? The benefits are clear -- the company can cook up new technologies, develop new businesses and take them public. With a series of mini-Corels going public you could interest Wall Street analysts again -- research coverage always follows IPO underwriting. The trick will be getting the funding for a leveraged buyout. Seagate (NYSE: SEG) is planning to go private, and by most accounts it's a great move.

4. Learn the basics. In the event Corel remains a public company, management has to deliver at least four consecutive good quarters. Cowpland never learned to underpromise and overdeliver. He overpromised and didn't deliver a thing. Sure Corel will be boring, but that's good -- if the company can execute well.

5. Pick one story and stick with it. Corel is a leading buzzword abuser. Give Corel a trendy technology, and it'll sound like it's going to conquer the world. Pick one focus and stick with it. If Corel is going to hitch its wagon to Linux, be the best damn Linux company around. Forge partnerships. Give Wall Street a few benchmarks. Cowpland gave us some new scam every quarter.

6. Open communications. Last night's media advisory was a typical Corel moment. Press conference advisory hits wires about 5 p.m. EDT sans any conference call information. Calls to Corel were fruitless -- you couldn't get past that automated attendant. If you want to tell your story to anyone outside of Ottawa you need a little investor relations 101.

7. Go out of business, but leave a legacy. We know this isn't considered much of an option, but the facts are still grim. Corel doesn't have a lot of cash and competes against Microsoft, Adobe and Red Hat to name a few. Even if Corel gets its act together, it's going to be tough to build its market capitalization. If all fails -- and it might -- go out of business and open the code to all of Corel's software so anyone who wants it can still use it and modify it. There won't be a Corel, but there'll be a legacy.

Sincerely,
Larry Dignan

TDAIN
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