The doctor is out

In the short term, Dr. Michael Cowpland’s resignation from Corel Corp. could be the embattled company’s blessing in disguise.

Amidst continuing financial woes, lagging software sales and a failed merger with Calif.-based Inprise/Borland, the founder, former chairman and CEO of Canada’s answer to Microsoft Corp. handed the keys to the camper to interim CEO Derek J. Burney – most recently the executive vice-president of engineering and chief technology officer for Corel. In doing so, the company’s nervous investors may feel more at ease with Corel’s future prospects.

Despite his passion to see Corel succeed on the global software stage, Cowpland’s flamboyant and often unpredictable approach to business did much for Canada as our only technological icon, but perhaps little for the company itself. Cowpland who founded the company in 1985.

“This (resignation) is something that had to be done, Corel is at a critical juncture,” said Kevin Restivo, an analyst with IDC Canada in Toronto. “Their revenue streams are not improving and they need to cut expenses. It’s time for a restructuring. Whoever takes over the reigns needs to devise a solid strategy and/or stick with the Linux strategy and not hop to another.”

Adding to that uncertainty is what kind of impending impact the leadership switch will have on Corel’s culture. While Burney was hesitant to discuss the cultural impact on the company, he did tell ComputerWorld Canada Corel’s first order of business is to return to its core competency.

“We will return this company to profitability and restore confidence in the financial community,” he said. “We will get back to basics and ultimately, create products for our customers to be creative. One might not think of spread sheets and databases as creative, but they are.”

The unforgiving truth

Gartner Group analyst Chris Le Tocq didn’t sugarcoat the fact he felt Cowpland had done much to hurt the Kanata, Ont.-based entity, but he did offer a glimmer of hope to go with the barbed wire.

“This gives Corel a chance to look at things and determine where they want to go,” he said. “Corel has a large install base that’s feeling ignored. They should ensure that base understands that they’re going to put in an effort to address their needs.”

Dr. Frederick Cryer, a former associate professor at the University of Copenhagen in Denmark turned technical writer with a Danish telecom start-up, is a long-time user of Corel’s graphics software and grew to embrace the organization’s Linux OS offering. Cryer said although Cowpland is clearly a hugely intelligent man, he has an engineer’s distaste for diplomacy, and that cost Corel dearly in the American market.

“Ideally, I’d like to see Corel continue to develop its ASP business, as this may be one of those pots of gold at the end of the rainbow,” he said. “Then again, Linux is developing nicely, even if most people aren’t aware of that fact. However, Corel may have to bow to the inevitable and develop the Gnome rather than the KDE interface for Linux. Bucking the combined might of Hewlett-Packard, Sun, IBM, Dell, Red Hat and others is not possible for a company with shallow pockets.”

Corel’s feud with Microsoft for desktop supremacy hurt its image stateside, particularly with the American media who wrote scathing diatribes of the company and of Cowpland, thus driving U.S. industrial investors away from its stock.

“A number of investors have been calling for this (Cowpland’s resignation) for some time,” Restivo continued. “This really is an opportunity of renewal for Corel…the company stalled when they stepped beyond their core competency.”

Cowpland’s Aug. 15 resignation announcement was attributed to his desire to pursue other interests while admitting it was time to allow other hands to handle the reigns.

“There is a change now in our technology that is validated. I’ve always been interested in start-ups and at this point if you look at Corel’s core positions, we’re perfectly poised to move ahead,” Cowpland explained. “But now is as good a time as any to pass the baton on to a new management team that can carry those core brands ahead.”

Sour times

Cowpland said his resignation had nothing to do with the Ontario Securities Commission’s (OSC) allegations of insider trading levied against him in October 1999. The OSC charged him with three counts of insider trading, after he sold $20.4 million of Corel stock in August 1997, which dropped in value by about 40 per cent the following month.

This evidently caused suspicion at the OSC. Cowpland has denied the allegations. If convicted, he could spend two years in jail and be fined $1 million in addition to being asked to make a payment equal to three times any profit he made.

“No relationship,” Cowpland deadpanned when asked if his resignation had anything to do with the OSC charges.

Further evidence of Corel’s financial slide surfaced last June when the enterprise cut 320 high-tech related jobs or about 21 per cent of its work force – a direct result of the failed Inprise/Borland merger.

According to the Toronto Star, Corel’s stock value plunged to $5.40 on Aug. 16 from a 52-week trading high of $64.65, prompting investors to again call for Cowpland’s resignation. But the enigmatic founder refused to concede defeat based on the corporation’s stock droppings.

“The stock has been going up and down a long time. In fact, the stock was this price before it went up to $60 last year and it was gratifying to see it go up 20 per cent [on Aug. 14] now that Linux has been validated,” he responded. “Stock prices are volatile, but I’m confident we will see a strong Corel ahead and a good stock price too.”

Corel’s foray into the Linux brand wars was intended to be the company’s saving grace, but Le Tocq blamed Cowpland and Corel’s Linux strategy as the factor driving the company’s nose dive.

“Corel essentially bought the farm with moving applications to Linux and the Linux desktop marketplace has not appeared,” he charged. “The Linux desktop market is a non-starter in the United States.”

Overshadowed during the Cowpland-departure media conference was Corel’s release of its Linux OS Second Edition and its suite of CorelDRAW Graphics for Linux.

“Corel grew with CorelDRAW and the acquisition of WordPerfect was a good decision,” Le Tocq figured. “The recent announcement of several large vendors supporting the Gnome Foundation’s interface for the Linux desktop project means the margin of Linux opportunities in the marketplace is less fruitful.”

But Burney said Corel is responsible for pioneering Linux for the desktop and the company will not waver from its commitment to the Linux OS.

“The latest PC data figures (on Linux OS adoption rate) are encouraging and [the Gnome announcement] is not the same situation as it was with beta and VHS,” he countered, suggesting Corel may not adopt the Gnome interface. “Linux on the desktop was largely ignored except by Corel and then these big companies all come forward with their announcement. It is a little confusing for the Linux community.”

In the long term, should the incumbent Burney manage to turn the software giant’s fortunes around, Restivo said Cowpland’s zeal will be sorely missed.

“He’s a great salesman and a great marketer and he raised the company’s profile on an international level,” he said. “His methods had an industry wide impact; he’s a pioneer in high technology.”

Cowpland – who retains 10 per cent ownership of the company – denied Corel was for sale and added he will remain on the company’s board of directors and as a technology advisor despite not having any input in the enterprise’s daily operations.


Let the people speak

The announced resignation of Dr. Michael Cowpland as chairman and CEO of Corel Corp. on Aug. 15 drew mixed reviews from high-tech observers on the sidelines.

Chat rooms and message boards of high-tech related sites were buzzing with opinions parlaying a sense of disappointment to sheer, unmasked joviality. The following is a sample of thoughts:

“As a multi-media producer, I can’t wait for Corel’s demise. At one point I was forced to use CorelDraw. I can still hear the laughter from service bureaus when I told them our art was on Corel; I’m still traumatized. Fortunately, I was able to talk my company into going with Adobe. [Corel] creates garbage, they do not deserve to succeed.”

“I think Corel should return to their original product lines. It seems that whoever owns the WordPerfect hot potato is in for some troubled times. What would inspire them to get into Linux?”

“Get back to graphics, forget WordPerfect and Linux. Graphics software is what made Corel. Loyal customers like me have stayed the course since version one, but I, for one, am concerned that Corel will fade away. I don’t want to see that happen. I would love to see them concentrate their efforts on improving their already-excellent graphics programs…stay in competition with Adobe and Quark.”

“My take is that this is long overdue. I’m glad that Borland/Inprise didn’t close their merger deal with Corel. I think that would have been a huge mistake for Borland/Inprise. While they have had problems of their own, they haven’t been anywhere near the magnitude of the problems at Corel.”

“Michael Cowpland did a lot for Corel, both good and bad, that cannot be denied. However, it’s time he left. The company has become diluted because of his scattered thinking. If he wanted to get into bed with Linux so badly he should have created a new company, one not associated with Corel directly. Hopefully, with someone else at the helm, excellent software like CorelDraw and WordPerfect can be given the attention they deserve and improved upon, instead of sitting on a shelf while everyone compiles a new code for an OS not many people consider a viable desktop.”