A bad sign for Corel

Corel has seen better days. Take it from me, Microsoft dumping its stake in the Canadian software maker is a bad sign. Microsoft dumping its stake for a big US$100 million loss is an even worse sign for the Ottawa-based company.

Corel will again be fighting an image battle for the rest of the

year. The market’s confidence in Corel will again be an issue. Instead of projecting health, like it did in 2001 when current CEO Derek Burney strategically acquired firms, at bargain prices, that strengthened the company, it will be defending itself against scrutiny.

Instead of talking about products such as WordPerfect or CorelDraw, the company is sugarcoating the fact that Vector CC Holdings of San Francisco will be taking Corel off of Microsoft’s hands.

With all due respect to Vector, I have never heard of them. Vector may be a player in this industry. They have helped out firms such as LanDesk and Real Networks for example. It may even be good for Corel in the end. However, Vector is not Microsoft. If I had to choose a partner and my choices were Microsoft or Vector, well my choice would be an easy one. And, I believe the market would rather have a known entity like Microsoft backing the company than a venture capital firm focused on “”special opportunity investments in software””.

To make matters worse, one of Corel’s long-standing fulfillment partners is suing the software firm for $2.5 million over a contract dispute. Saturn Solutions Inc. of Montreal said it had filed a suit against Corel with the Ontario Superior Court of Justice over an alleged breach of contract. Saturn provided reproduction, assembly, warehousing, packaging and CD-ROM manufacturing for Corel.

Why is Corel going to the trouble of defending themselves here? The $2.5 million suit is a drop in the bucket for Corel. Corel has more important fish to fry. The company is losing its focus and trying to overcome trivial matters like this dispute. Corel should have settled with Saturn before it went to the courts. They would have kept a key partner happy and more importantly not have this as a distraction.

This again furthers their image problem.

Whether current Corel management likes it or not, the name Michael Cowpland will forever be tied to the company. The fact his 1997 insider trading charges will finally be dealt with in court this month is another blow to Corel’s fragile image in the marketplace. I understand that it is very unfair to continuously link Cowpland, who is now the CEO of Zim Technologies, to Corel, but it is impossible to avoid.

The good news out of this for Corel is that one way or another the matter will be settled and Corel should be able to finally rid itself of the bad press surrounding Cowpland.

Corel also waffled on its channel sales strategy. Last year one of its executives Gary Klembara developed a direct sales strategy for Corel only for it to be dropped early this year in favour of a 100 per ce

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