Corel Finally Bails on Linux
TORONTO -- Canadian software developer Corel is expected to sell the majority of its Linux division on Wednesday to a privately held startup, a move that would end its commitment to developing the Linux desktop operating system software.
A source close to the negotiations told Reuters Tuesday that a newly formed company called Xandros will pay $2 million for the Linux unit, a division that comprised about 14 percent of Corel's total business as of January 2001.
L33tdawg: I still remember the time when Corel first launched their Linux offering -- it was pretty good actually, and looked to be all set to take over as the next 'desktop OS that wasn't part of the Microsoft monopoly'. How the times have changed eh?
Linux, created 10 years ago this month by Finnish computer programming student Linus Torvalds, is often seen as a rival to Microsoft Windows, the dominant operating system used in personal computers.
Speculation about the buyer of Corel's Linux division has circulated in media reports since last January, when the company's new chief executive, Derek Burney, said the division could weigh down Corel's growth. Earlier reports placed the unit's value at $5 million.
"The desktop division has the potential to hinder the company's growth and needs to be spun off and allowed to expand outside the company," said Burney on January 23.
"At this time there is nothing new to report," said a Corel spokeswoman. She reiterated that Corel is still looking to shed its Linux distribution business, which does not include software applications based on Linux.
Shares of Corel were up 8 cents at $3.66 on Nasdaq at Tuesday afternoon. In Toronto the shares were up 16 Canadian cents at C$5.67. The stock has traded in a range of $1.40 to $4 on Nasdaq since June 2000, following a steady descent from a Linux-inspired high of $39.25 in December 1999.
The sale of the unit would enable Corel to focus on its graphics software business, which it recently beefed up with the acquisitions of Softquad Software Ltd. and technical illustration firm Micrografx.
Corel is also likely to continue to sell Linux versions of its WordPerfect Office and CorelDraw software products, said the source.
"Corel is selling (the Linux division) because of the change in leadership. The former chief executive thought it was the future of the company, but Burney thought they were putting more money into it than they needed to," said a source who wished to remain anonymous.
Corel is expected to retain an ownership stake in the Linux unit of about 5 percent, with Xandros paying cash for the remaining 95 percent. Xandros is controlled by Linux Global Partners, a small New York-based holding company with stakes in a handful of Linux startup companies.
Corel's Linux division will continue to be based in Canada, with the same core of engineers that helped create the unit staying on as employees, said the source.
PC Data estimates that Corel's Linux division sells about 25 percent of all Linux operating systems for desktop computers, second only to Red Hat.
Source: Wired.
