Microsoft invests $135 million in Corel

By Bob Trott
InfoWorld, 10/03/00

Microsoft made a $135 million investment in applications rival Corel on Monday, creating a partnership the two companies said would focus on Microsoft's .NET initiative.

Microsoft's purchase of 24 million shares should provide a much-needed fiscal shot in the arm to Corel. The financially ailing Ottawa-based company has laid off about 450 employees this year and saw its proposed merger with Inprise collapse. The firm's misfortunes were punctuated on Aug. 15 with the surprise resignation of founder and CEO Michael Cowpland.

Corel has been a key backer of Linux, the open-source operating system that many believe could be a key competitor to Microsoft's Windows franchise. Corel has pushed Linux on the desktop, where Microsoft feels confident it can hold off the upstart OS.

"Our most recent work has focused on strategies to move our applications including CorelDraw and WordPerfect as well as our Linux distribution-Corel Linux OS, onto the Web," Corel interim President and CEO Derek J. Burney said in a statement. "By leveraging Corel's development expertise and popular product line with Microsoft's .NET platform, we believe we have found a great combination to accelerate this process."

Although Microsoft's investment gives it a stake of almost 25 percent in Corel, the Redmond, Wash.-based company will not have voting privileges. As part of the deal, unspecified legal issues also were resolved.

Microsoft's .NET strategy aims to broaden the Internet capabilities of Windows so the operating system facilitates Internet services on a seamless basis. The initiative includes creating new user interfaces, expanding Microsoft's development tools, applications, and middleware to further the "software as a service" goal.

"Corel has some of the best-known software on the market and expertise in online-service delivery, graphics, and interface design. Coupled with Microsoft's .NET initiative, our companies will be able to cooperate on projects that will benefit customers worldwide," said Yuval Neeman, vice president of Microsoft's developer division.