Corel staffers face up to prospect of 500 job cuts

C$15-30m cash injection may not be enough

By Tony Smith, 1st June 2000

Magic Quadrant for Enterprise Backup/Recovery

Corel appears to be rapidly imploding, despite the C$15-30 million cash injection it successfully negotiated last week.

According to a Reuters report, the morale of employees is poor, for all CEO Michael Cowpland's claims that the mood among staff is "good".

Information from insiders suggests Corel has a C$40 million cost-cutting target, and that's inherently going to mean job losses - potentially more than 500 of them, a big chunk out of Corel's 1500-strong payroll.

No wonder, in the words of one ex-staffer cited by Reuters, there's "a lot of resumes floating around". Certainly, Corel's executive VP for corporate services, along with its VP and general counsel, have both just quit. And it's hard not to imagine others scouting around for new jobs while there's so much uncertainty hanging over the company.

Corel has even, according to Reuters, cancelled all company credit cards. It's a very bad sign when a company is worrying about what is, for a company of Corel's size, effectively small change. Oh dear...

But let's assume for a moment that Cowpland's boast that "once we're through this kind of little cloudy stage, we'll be looking real good", is an un-spun appraisal of the company's situation. With the Inprise/Borland merger off, Corel is desperate for Linux to take off in the mainstream, attracting the kind of consumers and small business customers who buy its productivity and graphics software.

Six months ago, the company was winning sales of $71.3 million, since then its sales have fallen 38 per cent to $44.1 million, and there's no real sign of a turnaround. Clearly sales of its Windows products are tailing off, possibly because Windows users are assuming Corel's focus on Linux shows a lack of interest in maintaining the Windows apps. That's not entirely true, since the Linux versions of CorelDRAW, WordPerfect, etc. are just the Windows apps modified to run through the company's WINE Windows-on-Linux emulator. But the perception could damage Corel's sales further.

Without Linux sales to balance that shortfall, Corel is going to run into major problems fairly quickly. The $99 WordPerfect Office, for instance, is up against free-of-charge alternatives, which are likely to prove more attractive to Linux's prime constituency of techie users (ie. folks not too interested in personal productivity apps) used to getting software for nothing.

Linux remains largely untested as a commercial software platform, and companies in far better health than Corel have paused for thought before porting top-dollar apps over to the open source OS. Corel, of course, has no option - it has to try. How long it can afford to keep at it is another matter. ®