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Corel-Intel Linux PC claim triggers row

Chipzilla seems not to be entirely happy. Oh no.

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Could "Cortel" challenge Wintel? According to a report in the Toronto Globe and Mail on Thursday, Corel is talking to Intel, and an unnamed OEM with a view to launching a cheap Corel Linux PC, presumably also loaded with the WordPerfect suite. In an interview Corel CEO Michael Cowpland just before Corel's annual shareholders' meeting on Wednesday. Cowpland said that talks had been going on "for months". This claim was later confirmed by Intel spokesman Doug Cooper, who added that "it's certainly good for consumers". But this is where it gets complicated. Shortly afterwards Intel denied it was in any such talks, and said that it was just naturally in an ongoing relationship with "hundreds and hundreds" of software companies to make sure their code ran properly on Intel chips. The Corel, weirdly, chimed in with a statement purporting to respond to the article, but not entirely doing so: "Corel has enjoyed a long-standing relationship with Intel Corporation. Since 1997, Corel has optimised its software for Intel's processors. Corel has also included Intel's MMX technology in our flagship WordPerfect office and CorelDRAW graphics suites. In early 1999, we optimized our products for the Pentium III processor chip and are looking with interest to Intel's next generation of processors." Not exactly a categorical 'no talks,' is it? "At the same time," the statement continues, "Corel is in regular contact with major hardware manufacturers regarding bundling opportunities for Corel's award-winning applications, including Corel Linux OS and our forthcoming WordPerfect Office for Linux. Corel CEO Michael Cowpland's remarks quoted in yesterday's Globe & Mail were in reference to these general discussions and were not related to any specific deal or ongoing discussions with any particular company." It's a puzzle how Cowpland's remarks could have been so badly misinterpreted, but if he thought he was on the point of a deal, and got over-excited, then Intel got very angry when he did... So if there were talks, maybe they're off now. But maybe they're not. The Linux PC idea is a no-brainer so far as market interest is concerned, and it's just surprising that it has taken so long to get this far. Although the idea could be easily emulated by other consortia, the potential market size is big enough for quite a few players. Meanwhile, back to Corel's annual shareholder meeting, which is always a fun event, with sentiments being expressed freely and the chance to  have a go at CEO Michael Cowpland. This year's meeting on Wednesday was no exception, when it became generally known that Robert Coates, a director and shareholder of Inprise, is opposing the Corel/Inprise merger. Coates resigned from the Inprise board before the approval of the merger, but had previously described the deal as "brilliant", Inprise CEO Dale Fuller told the meeting. There was confidence that the merger would go ahead despite his objection, with most of the Inprise institutional shareholders backing the merger, which is expected to be finalised around mid-June. Apparently Coates is concerned at the erosion of Corel's share price since the merger was announced, in which Inprise shareholders are to get 0.747 of a Corel share for each Inprise share. By Thursday's market close, the value of the deal had shrunk from $1.07 billion to $832 million, but Cowpland was adamant at the meeting that he would not sweeten the offer. The shares that Coates holds were worth around $12 million when he issued the writ last August (Inprise was around $4 at the time), and he says he paid over $18 million for them, suggesting an average purchase price of some $6 per share. With Inprise closing at $9.78 last night, he has of course made a tidy profit were he to sell his holding now. Coates is personally known to Fuller, and also claims that he recommended Fuller's appointment as CEO. Coates, who holds around 6 per cent of Inprise' shares and runs a Dallas-based management consulting firm, was appointed to the Inprise board last June with the task of increasing shareholder value. He was evidently very keen to get on the board since he was initially trying to do this through a stockholder nomination. Last August he filed a suit against Inprise and five directors alleging that they unlawfully restricted his access to information and thereby deprived him of the ability to discharge his fiduciary and statutory duties as a director. His bluntly worded writ claimed that "Inprise has imposed a gag order" on him and that "these Orwellian measures establish Mr Fuller as a corporate Big Brother" who controlled communications about the company. Inprise said that it considered the suit to be "frivolous and entirely without merit", and Coates withdrew it at the end of August. We can reveal that this was not the first case that Coates has brought. In the District Court in Dallas in 1998, Coates accused Heartland Wireless Communications of issuing false press releases, but the case was dismissed following a motion by Heartland. ®

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