Corel acquires Jasc to draw home office crowd

Analysts say that Corel Corp.‘s acquisition on Thursday of graphics software vendor Jasc and a renewed focus on the consumer segment may help put the company back on track.

Minneapolis-based

Jasc Software Inc. is best known for its Paint Shop Pro line, which targets the home and small office user. The software is a good fit with Corel’s existing graphics software, CorelDraw and Corel Painter, which addresses the professional user market, said Brett Denly, executive vice-president of worldwide marketing.

“”What the acquisition is really giving us is a great play within the consumer space,”” said Denly.

Financial details of the transaction were not disclosed, but Denly said that Corel plans to maintain Jasc’s Minneapolis home as a U.S. office.

“”The (Jasc) staff are very important to us as a going concern, so we don’t have any immediate plans to change anything at all here in Minneapolis. We’re talking to all the employees and telling them that,”” said Denly.

There are approximately 120 employees at Jasc, according to Jasc CEO Kris Tufto, who said he would remain at Corel in an executive position.

The Jasc name will disappear in short order, but the Paint Shop brand will be around for the foreseeable future, said Denly. Eventually it may be absorbed into an existing Corel brand name, but Paint Shop products will be sold as standalones for now.

This is the first acquisition for Ottawa-based Corel in three years. In 2001, Corel bought Toronto firm SoftQuad, which made Extensible Markup Language (XML) tools like Xmetal, as part of a failed push to enter the enterprise software market.

Last year, Corel itself changed hands when it was acquired by San Francisco venture capitalist Vector Capital. At the time, a group of staunch Corel supporters, operating under the name CorelRescue.com, attempted to block the deal. But shareholders approved Vector’s US$1.05 per share bid and CorelRescue’s Web site is no longer in service. Since the ownership change, Corel has grown its revenue by approximately 40 per cent, according to Denly.

“”We’ve had a very, very focused strategy since going private,”” said Denly. “”Our focus strategy is really around our core products . . . WordPerfect, Corel DrawGraphics suite and Corel Painter.””

Corel’s Jasc acquisition is certainly in keeping with that strategy, said Joe Wilcox, analyst at Jupiter Research.

“”Corel’s definitely back on track,”” he said. “”Graphics has been a very strong area for Corel for a very long time. There was a CorelDraw long before Corel acquired WordPerfect.””

By adding more consumer products to its graphics line, Corel may be able to capitalize on the boom in home digital photography, said Wilcox. According to Jupiter, 52 per cent of U.S. households own a digital camera.

“”How do you help consumers discover the capabilities? Well, by providing robust but approachable products. With Jasc, (Corel has) not only photo editing but photo management,”” he said.

The Jasc acquisition is “”a really good confirmation”” that Corel is ready to focus on its strengths again, said IDC Canada Ltd. analyst Warren Shiau. Corel’s reach has sometimes exceeded its grasp, he said, particularly when it attempted to break into the Linux market.

Corel sold off chunks of its Linux distribution in 2001 to Ottawa neighbour Xandros for US$2 million.

“”If they go off on that tangent again, we can all start worrying,”” said Shiau.

Shiau agreed that digital photography represents an opportunity for Corel, particularly at a time when so many other vendors like Microsoft and HP are just now delivering on integrated products aimed at that market.

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