Corel and Microsoft Patch Differences

Corel has endured a number of shakeups in the past year as it struggled to turn around a string of poor financial quarters. In August, the company's long-time chief executive officer, Michael Cowpland, resigned to be replaced by interim CEO and President Derek Burney. The vendor has also laid off a number of employees in the course of 2000, including the recent elimination of 139 jobs at its engineering operation in Dublin, Ireland.

Corel said Microsoft purchased 24 million nonvoting convertible preferred shares of Corel stock at $US5.62 per share. The companies valued the deal at approximately $US135 million, and said it signals the start of increased collaboration between the erstwhile rivals.

Corel and Microsoft said they plan to develop, test, and market products related to Microsoft's .NET platform -- a broad initiative to supply products and services that should enable new types of Web-based services. Trade shows, product launches, and joint marketing efforts are examples of the companies' shared plans for the future.

The announcement will come as a surprise to some industry watchers. The two companies have been fierce rivals in the productivity applications market, and Cowpland has been one of Microsoft's more vocal critics. Part of Monday's deal involves settling outstanding various outstanding legal disputes between the two companies.

In September, Corel revealed that an unnamed investor would purchase 14.7 million shares of the company over the course of the next two years. At that time, the deal represented almost 20 per cent of Corel's total number of shares and would have been worth close to $US56 million.

While the company could not be reached to identify the unnamed investor, Monday's deal with Microsoft represent nearly 25 per cent of Corel's total outstanding shares of common stock.

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Ashlee Vance

PC World
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