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Corel to reveal new business plan

As the Canadian software maker prepares to take the wraps off its "new corporate growth strategy," industry watchers aren't predicting any immediate upheavals for the struggling company.

Mary Jo Foley
Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network.
Mary Jo Foley
3 min read
As Corel prepares to take the wraps off its "new corporate growth strategy" Tuesday, industry watchers aren't predicting any immediate upheavals for the struggling Canadian software company.

Analysts said Corel's strategy announcement on Tuesday will likely contain few surprises. The company is not expected to detail its plans for its Linux operating system business. That announcement is still more than a month away, according to sources close to the company.

Last year, after the exit of CEO Michael Cowpland, Corel cut 320 jobs as part of its effort to return to profitability. In October, the company received a $135 million investment from Microsoft in exchange for Corel's agreement to back the Microsoft.Net software-as-a-service initiative.

On Tuesday, Corel is expected to reiterate its commitment to its core products--its WordPerfect Office suite, which competes head-to-head with Microsoft Office, and the CorelDraw graphics program.

"We're not expecting more layoffs or major restructuring. We think that's behind them now," said Jean Orr, an analyst with BlueStone Capital.

"Corel's current management knows they need to become profitable in their basic businesses--CorelDraw and their business suites," Orr said. "Those areas should be funding their new areas of expansion and the rest of the company."

Linux questions linger
Corel's executive team, led by CEO Derek Burney, scheduled a news conference in Ottawa starting at 8 a.m. PST Tuesday to announce the strategy change.

Corel has said the new strategy "is designed to better position the company for long-term growth and profitability." The company has enlisted a third-party management consulting company to help it develop its plans.

Industry sources said the company is not likely to go public Tuesday with details of its planned sell-off of its Linux business. Corel is expected to say that the company is continuing to evaluate its Linux options.

Corel is close to finalizing a deal with Linux Global Partners, a New York holding company, which is expected to buy 80 percent of Corel's Linux business for $5 million and allow Corel to hold the remaining 20 percent, according to sources. But the particulars of that deal are not expected to be announced for another month or so, sources said.

Corel sells a version of the Debian Linux distribution, which the company calls Corel Linux and is aimed at desktop users. Former CEO Cowpland was a prominent backer of Linux and Java as technologies that would allow Corel and others to blunt the force of Microsoft's Windows.

"Cowpland had everyone focusing a lot more attention on Linux than it deserved," said BlueStone's Orr. "Now, Corel sees Linux as part of the larger desktop effort, as a means to sell its applications."

As part of the terms of the Microsoft investment in October, Corel executives said that Corel would agree to port Microsoft's .Net framework technologies to Linux, if Microsoft desired. Neither Microsoft nor Corel has been willing to comment on whether Microsoft is interested in exercising this option, however.

At the LinuxWorld trade show in New York next week, Corel is slated to show off its Linux operating system, WordPerfect Office 2000 for Linux, CorelDraw for Linux and Linux Professional Services.