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Corel Linux sell-off nearly a done deal

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Troubled software developer Corel looks set to sell off its Linux operation - an option mooted just three weeks ago by company CEO Derek Burney.

Interviewed at Comdex, Burney said he was ruling nothing out and nothing in in his attempts to find a solution to Corel's financial woes. Burney specifically said that one option under consideration was the sale of one or more Corel divisions, including the Linux operation.

Burney took over the CEO's job last autumn, and reshuffled the business into four divisions: WordPerfect, graphics, Linux and the more nebulous R&D.

At the time of the interview, Burney said a major announcement on the company's future direction would take place in around three weeks' time. Deadline's up, Derek, and suddenly industry sources, cited by ZDNet US, reckon venture capital company Linux Global Partners is going to buy Corel's Linux division for $5 million in cash and a 20 per cent share in a new company LGP will build out of the division.

Corel hasn't commented on the claims - presumably it's preparing Burney's big announcement - but LGP said that it "looks at lots of deals and to discuss any one in particular would be premature", according to the ZDNet US report, which sounds to us like a tacit 'yes, we're talking'.

Talking, however, isn't the same thing as doing a deal, and the negotiations may not be over. A deal like this, you'd expect to be announced very quickly after completion. The fact it hasn't been suggests it's still close to the wire.

Ridding itself of the Linux operation makes some sense for Corel. It's money in the bank, and it doesn't preclude the company selling its applications - Corel's real strength - into the Linux market; it doesn't need its own distro to do that.

Corel's acquisitions over the last year - picking up, for instance, MetaCreations' graphics tools - suggests a strategy of focusing on applications in areas that its main competitors don't themselves target. If that is the plan. Corel's Linux distro sits rather uncomfortably within it, and a sale is always preferable to just killing the software.

Of course, there's one other option here. Corel might be buying a company off LGP. A long shot, it's true, but as Burney said in his interview: "To be successful in the Linux market, you need a wider product offering. There's got to be some kind of acquisition". LGP owns stakes in a number of Linux companies - including, incidentally, CodeWeavers, the company behind the WINE Windows-on-Linux emulator that drives all of Corel's Linux apps - and it's entirely possible that the rumours of a deal are correct, just the wrong way round. ®

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