Tuesday, Oct. 3 was a big day.
It was the day Corel unbuckled its pride, dropped its independence and jumped into bed with former arch-nemesis Microsoft.
It was also the day home-grown powerhouse Geac lost its CEO, capping 17 months of very poor financial performance with a move that will either restore confidence in the Toronto-based firm or bear out fears that the company is in a downward spin.
So far, a bummer of a day for us Canadians. Luckily for our national morale, Oct. 3 also brought triumphant news from Nortel: the Brampton, Ont.-based networking giant is set to span Europe and North America with a huge IP-based network. The building project is worth a cool $2 billion to Nortel.
Who wants US$135 million
Scant weeks after Michael Cowpland walked out of his company, in strolled Microsoft, carrying bags of cash. Under different circumstances, Cowpland would be spinning in his grave. As it is, he’s staying quiet on this latest development.
Microsoft purchased 24 million Corel shares, valued at US$5.63 each. That’s almost one quarter of the company.
The agreement is a re-enactment of Apple’s 1997 sleeping-with-the-enemy deal in which Microsoft pumped US$150 million into that ailing company. Now just as then, reaction to Microsoft’s largesse is sharply divided, and the problem for us friendly neighbourhood pundits is that both the naysayers and the gainsayers have their points.
For the end-of-the-worlders, the deal is the death knell of an independent, dynamic Corel. Microsoft’s money, it is assumed, is more tow line than life line and Redmond will now be calling many of the shots. Look too, the doomsayers say, for Corel to drop its recently-found Linux religion, as the open-source OS is at odds with Microsoft and its .Net initiative.
Take a glance at the other hand, however, and you can also see Corel’s salvation in the deal. The cash infusion will help Corel stave off corporate dissolution, and perhaps the company can pull up its fiscal socks before the dough again starts to run thin.
Also, say what you want about Microsoft, the firm knows how to make money, and Corel could certainly use some help there.
Again, both interpretations are valid. Microsoft did not invest its millions out of altruism, and Redmond will no doubt influence Corel’s destiny. That is unfortunate: it would have been better for Corel to remain completely independent. However, given the choice between existence and nothingness and death, perhaps new Corel CEO Derek J. Burney made the right call.
Geac Computer Corp. was once one of Canada’s shining tech stars, but its lustre has certainly dimmed recently, first with the exit of CEO Douglas Bergeron and then by axing 500 jobs worldwide.
The company’s poor financial performance calls into question the acquisition strategy the company has pursued of late. This seems to be especially true with regard to its recent purchase of British-based JBA Holdings PLC.
The results are reminiscent of Corel’s problems in stick-handling its multiple acquisitions.
The true north
But at least we have Nortel. Although the company has been hit with some criticism over its increasingly Americanized operations, the firm is still based in Ontario, and it is doing fine.
It’s good to know that Europeans and North Americans will be playing and working over a pipeline sourced from the Canucks. Few of them will ever realize that fact, but we can still take some pride from the implementation.
Canada has always had a great reputation for great technology. That distinction has been earned by, among others, Geac, Corel and Nortel.
Geac is floundering but still viable. Corel is a little less Canadian, but at least it may soon be able to breathe without life support. Nortel is still in there hitting for the home team, and on Oct. 3 at least, the company really saved the day.