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Corel spins off Linux hardware business

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Corel is to spin off its Linux hardware business to Hardware Canada Computing in exchange for a 25 per cent stake in HCC. The latter company, which specialises in Unix, NT and Sparc and has revenues in the region of C$60 million, will acquire all the assets of Corel Computer. The Corel Computer division has been developing the NetWinder range of ARM-based Linux thin client/thin server machines for some time now. Corel CEO Mike Cowpland yesterday said that development was "essentially complete", and initial sales had indicated "extremely positive acceptance". Cowpland also said that Corel has considered spinning off the NetWinder business in the past, but decided not to do so "until the time was right and in a fashion that would deliver the fullest possible value to our shareholders". The nature of the acquirer will, however, be a matter of some concern to the Linux community. In the Canadian market HCC is a substantial player, claiming to be one of the country's largest VARs, but it clearly doesn't yet have the international heft to build NetWinder sales quickly. HCC president Mike Mansfield, however, claims that "Linux and open source code is the future", adding that the acquisition "has vaulted us into a world-class opportunity which will let us move forward with an initial public offering later this year". Corel meanwhile intends to stick to its knitting, concentrating on the WordPerfect and CorelDraw product lines in the future. Yesterday, the company announced that it was back in profit, showing revenues for Q4 1998 up 54 per cent to $67.2 million, and net income of $6.8 million. For the year revenues were $246.8 million, with a net loss of $30.4 million. This compares to $260.6 million and a loss of $231.7 million for fiscal 1997. ®

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