Corel Corp.’s president and CEO Derek Burney has decided his company should play to its creative strengths.
The company needed to do something. Stock prices were dropping almost daily, faith in the company was low and revenues were a thing of the past.
The board of directors called in McKinsey & Co., a management consulting firm based in London, to work with Corel on a new corporate policy.
Burney said the main focus of the new strategy is on the creative products including CorelDRAW, WordPerfect and PHOTO-PAINT.
“The strategy is broken into three phases,” he explained. “Phase one is three to 12 months. In that time, we’re looking to upgrade as many people as we can to CorelDRAW 10, plus a massive concerted effort to embrace the Mac community.”
During phase one Corel will also look to sell or “spin off” the operating system of its “Linux adventure,” although Corel will still sell its applications for the Linux platform.
Burney noted the opportunities for Linux could be immense for a company that has an end-to-end solution, but that it can no longer be a strong focus for Corel.
“There’s no question that when you adopt a strategy like we did for Linux, that you can’t just give it a little bit of attention, you have to give it a big push. That decision was great when it was made, but for this company right now and looking toward the future, we want to narrow down what we are doing and focus on one thing.”
New York-based Linux Global Partners will be buying Corel’s Linux platform, with the deal closing this month, according to the Financial Post.
“The goal for us is to allow or unleash the power of Linux…This also gives us an opportunity to pick a singular focus for the company and get everybody here aligned on one objective,” Burney said.
He stressed the importance of this focus.
“By defining that and articulating it and having it be our message, we know that everything we do will be in line with that and we won’t get distracted by other things even if they look like they might be good opportunities,” he said.
Rob Black, Canadian Information Processing Society (CIPS) Toronto president, was disappointed by the dumping of Linux.
“We have believed that Corel has been a Canadian star in the Linux world, in terms of leadership, and this appears to be a pull back from that leadership role,” Black said.
He noted that Corel has made good contributions to the Linux world by putting application software on to the Linux platform.
“They put some significant tools there,” Black said. “WordPerfect is a well-distributed, well-used word processor and they put that on the Linux platform, which was a terrific move. Who else has something that they can bring to the table like that? Who else has such great graphics programs that they put on Linux?”
Shareholders also seemed to question Corel’s new corporate strategy, of which the new logo was probably the most unexpected change, responding with a 22 per cent drop in shares on Jan. 23, the day of the announcement. The shares dropped $1.32 to $4.58.
Burney stated this new strategy will bring Corel into the black within this fiscal year, and he hopes for a 20 per cent growth in annual revenue after that.
Phases two and three will involve acquisitions and investments, according to Burney.
“If you’re first to market in an area where leadership hasn’t been defined, you can grab a large market share. So we’re examining holes we think we can fill,” Burney said. “That’s why we need to make some acquisitions – to get in there more quickly than we would is we were simply doing the development ourselves.”
He also noted that in phase three the company hopes to focus more on wireless. “That’s in the two- to three-year time frame,” he said. “That might be aggressive. It really depends on how the network companies progress with giving people bandwidth and connectivity.”
