Linux recovery temporary

Can Corel make a comeback? - Company Operations

Canada's software giant will be shaking off Cowpland's shadow for long time to come

For a man often described as flamboyant, Michael Cowpland was anything but at the Comdex Canada 2000 show.

Following a lacklustre keynote address that made no mention of his company's financial woes, the Corel founder left the podium and disappeared to take pre-scheduled press interviews, while Corel Draw 9 for Linux was demonstrated by an employee.

Reporters had been cautioned not to ask about the company's money problems during their 15 minutes with the embattled CEO as that was an issue of the past.

But after his eighth interview with the media, a PR handler emerged from the interview cubicle within Corel's Comdex booth to inform the next in line that Cowpland needed a few minutes and some water. Something about reporters hammering away on certain issues.

In his interview that day with CDN Cowpland referred to the company's problems as simply a "temporary squeeze" and predicted Corel would be out of the red by year's end.

One month later Cowpland announced he was stepping down. Interim CEO Derek Burney was appointed, and Cowpland bowed out of the limelight, moving to the shadows as a member of Corel's board of directors and to act as a technology advisor to the company.

The news didn't surprise an industry that had been watching as the Ottawa-based software firm struggled to find its footing on increasingly shaky ground.

After 15 years at the helm of the company that bears his name (Corel actually stands for Cowpland Research Laboratories), Cowpland's departure was presented as a decision to explore new ventures in the Linux arena.

"It's something that has been brewing in his mind for some months now," Burney told CDN. "He approached the board several months ago with the idea. And really it just comes down to Mike being an awesome entrepreneur.

"Being involved in startups and in the Linux side of things really excites him. And so he felt it was a good time for him to go on and do that."

Analysts were less charitable, viewing Cowpland's exit as long overdue and a necessary first measure to get the company back on its feet again.

"I think having Cowpland resign puts a new face on the company," commented Kevin Restivo, a software analyst with IDC Canada. "For any product strategy to succeed I think they had to show something is different and what better way to do that than to have what many people have seen as the problem, resign."

Cowpland had been looking to "the freedom" of Linux technology to expand Corel's market share and take on Microsoft.

That may have been the beginning of the end for Cowpland and Corel.

"There had been problems before that, but nowhere near the extent of when the company began to take on Microsoft," said Restivo. "At one point perhaps Microsoft was vulnerable in the office productivity suite applications game, but at the point Corel entered the fray, the battle for the desktop was done and Corel's revenues have reflected that, too."

Picking up where Cowpland left off, Burney plans to push Linux for the desktop, which he says has made significant gains in recent months.

"It's had its fits and starts. If we look at the latest PC Data numbers, in the month of July we doubled the market share from the month before, which was a staggering increase," he said.

Burney has assumed the role of turnaround man in what has been referred to as an interim position, but he is looking at it as a long-term assignment.

Formerly executive vice-president, engineering and chief technology officer, the 37-year-old Burney feels he has an inside edge an outsider might not bring to the table. He is confident the company is on the road to recovery and that means further job losses aren't in the cards.

ANALYSIS

In June 320 positions were eliminated as part of a cost-cutting measure with pink slips issued company-wide.

That left some to wonder how Corel was planning to sell the Linux strategy with fewer resources.

The layoffs were estimated to save about $11 million towards the company's desire to reduce costs by $40 million on an annual basis.

His goals now are twofold, but improving the company's tattered image is high on Burney's to-do list.

"One of the things I'm looking at apart from restoring the company to profitability is restoring its credibility," he said. "I don't think it's a secret that there have been some issues there."

Burney says the company will be positioning itself to promote its graphics line to Macintosh users. Last year the graphics division accounted for 44 per cent of revenue for Corel.

"We want people to recognize that Corel Draw is a professional product. It's a matter of embracing the Mac community in an unprecedented way."

Moving forward, Burney said the software maker will promote its products with a more focused approach for each one.

Burney is the new face of Corel, but it is Cowpland's legacy of aging software products and debt that will pose hurdles for the company in the months to come.

And while Cowpland is expected to rise from the ashes again, the question remains; will Corel have the same chance to reinvent itself?