Microsoft Writes Off Corel

PizzaFace writes "Microsoft resuscitated Corel two and a half years ago, paying $135 million for a quarter of Corel's equity ownership. Corel talked then about bringing its products to .Net, and even hinted that it might use its Linux expertise to port .Net to Linux. Since then, Corel gave up on the Linux business and isn't talking anymore about .Net, but is instead riding its XML hobbyhorse. So Microsoft is selling its stake in Corel to a VC firm for $13 million, taking a 90% loss on the investment."

Comments

Re:90% Loss?

[Ninja Programmer]

Prior to the X-Box project, the Microsoft entertainment group was profitable. Aside from that your point is correct -- every other division of Microsoft loses money.

Re:Why corel is dying

[vadim_t]

Are you trolling?

CorelDraw is a vector drawing program. They do have a Photoshop-like program, PhotoPaint, I think. But CorelDraw and Photoshop don't have anything in common. They're used for quite different things.

A bit misleading...

[Anonymous Coward]

Corel talked then about bringing its products to .Net, and even hinted that it might use its Linux expertise to port .Net to Linux. Since then, Corel gave up on the Linux business and isn't talking anymore about .Net, but is instead riding its XML hobbyhorse.

In reality, Corel wrote Rotor (the shared source version of .Net for Free BSD) and also wrote Grafigo in C# and .Net.

Half-truths are just as bad as half-lies.

Re:Missing the point

[fudgefactor7]

Uhhh. Pardon me, but I think that 2.5 yrs ago, when MS bought it's $135M share in Corel, Corel wasn't in the Linux business. That was a later concern after they had money. Plus, MS bought 1/4 of Corel, not all of it, so they didn't "purchase Corel." And thirdly, MS didn't kill Corel, Corel's crappy management did it to themselves.

the timing

[univeralifepadre]

just a couple more tidbits - yesterday corel announced that the next version of WordPerfect Office 11 will ship in April, at least two months ahead of Microsoft Office 2003, and there was also an eWeek story about Microsoft Office embracing XML.

Re:Missing the point

[Speed Racer]

They practically killed Wordperfect by themselves, even before Microsoft took equity in them.

WordPerfect had been on its deathbed long before Corel came into the picture. Novell mismanaged it into the ground and dumped it on Corel in January 1996. By that time, Word had already supplanted WordPerfect as the word processor of choice for most professionals (with lawyers steadfastly refusing to leave their beloved WordPerfect 5.1). Corel is many things but you can't pin WordPerfect's demise on them. Novell is the culprit in that whodunit.

Re:Missing the point

[twitter]

Uhhh. Pardon me, but I think that 2.5 yrs ago, when MS bought it's $135M share in Corel, Corel wasn't in the Linux business.

Bzzzzt! You could not be more wrong. By late 1999, Corel had a Linux distribution and had ported Word Perfect and Correl Office to it. They were giving away "personal" versions of Word Perfect, the Word Processor that ruled the PC world untill Microsoft dumped Word on business students. As Word Perfect format was still the only officialy accepted private document format at most government agencies and business, Word Perfect still represented a significant threat to M$ and combined with a non M$ operating system M$ had no power to mess with it. Word Perfect 2000 came Windows only and the Linux version used Windoze emulation. Was this a co-incidence? I think not. Crappy management wimped out and took their little M$ bribe when they could have made something new and useful.

Re:Why corel is dying

[DragonMagic]

Not only this, but myself and other authors won't touch Word because its formatting and macros are horrible, it botches documents to death when you upgrade or convert, and it can't even format a page typographically for manuscript formats.

WordPerfect, WordStar and other programs which were designed for word processing rather than making memos and pretty signs for businesses are the true power programs for writers. WordPerfect 10 isn't as great with today's software as WordPerfect 5.1 was with software of that day, but it's still well worth the money.

Re:Why corel is dying

[200_success]

WordPerfect 6 (for DOS) was an awesome product for its time. Nothing else came close in terms of features and speed. It had a bit of a learning curve, but was still far easier to use than WordStar.

The subsequent versions of WordPerfect on Windows couldn't compete with MS Word. The features WordPerfect so great on DOS made it a fish out of water on Windows. The numerous function keys like Shift-F7 and Alt-F11 were non-standard on Windows. The paradigm of Reveal Codes (which let you know exactly what was in your document) and explicit Print Preview (which made editing fast on slow hardware) was completely inconsistent with WYSIWYG. Porting to Windows made WordPerfect lose its competitive edge. It's the same story as Lotus 1-2-3 and other apps.

Anyway, it's wrong to give Corel credit for WordPerfect. Novell bought WordPefect Corporation, and Corel bought WordPerfect from Novell. Microsoft bought part of Corel. The process of salvaging its value began way back when WordPerfect Corporation was sold.

Re:Well, duh

[Slack3r78]

Huh? MS tends to MAKE money.

I don't mean to troll, but I'm afraid that you've been misled. As has been previously discussed here on /., Microsoft's financial filings show that they lose money in every single division except for Windows and Office. They then use the extreme profits to prop up other ventures they may decide to persue. I believe it was shown that XP Pro could be sold for $35 a copy and MS would still make an above average profit on it. Consider that you can't get a copy for less than $200 (and that's OEM), and it gives you an idea of just how badly most of MS's divisions are bleeding cash.

Re:90% Loss?

[sg3000]

> I have never read (becides from slashdot) that MS
> loses money on everything but Win/Office.

Abrahams, Paul. "Microsoft Shows 85% Profit Margins for Windows," Financial Times. November 17, 2002. (Sorry, but the URL is for subscribers only).

Here are some choice quotes from the article:

Microsoft has revealed for the first time that it has made profit margins of 85 per cent on its Windows system while its remaining businesses made losses, raising questions about the benefits of the group's costly efforts at diversification.

The client division, which markets Windows, generated operating profits last quarter of $2.48bn on revenues of $2.89bn, implying margins of 85 per cent.

Among Microsoft's other businesses, the home and entertainment di vision, which includes the Xbox games console, lost $177m in the quarter on revenues of $505m. Salomon Smith Barney estimates it loses about $120 on each console it sells.
MSN, the internet service provider and portal, lost $97m, down from losses of $199m in the same quarter last year, on revenues up from $431m to $531m.

The business solutions group, which provides software for small and medium-sized businesses and includes recent acquisitions Great Plains of the US and Navision of Denmark, lost $68m on revenues of $107m.

And the CE/Mobility division, which includes mobile telephone software and the Windows CE operating system for handheld computers, lost $33m on revenues of $17m.

The Register also has an article based on Microsoft's public SEC filings:

The breakdown of financials by division was published for the first time in Microsoft's Form 10-Q filing to the Securities & Exchange Commission, presumably as a side-effect of corporate America's attempt at a post-Enron clean-up. For the period ended September 30th, the two cash cows of Client (i.e. Windows) and Information Worker (Office) produced operating income of $2.48 billion on revenue of $2.89 billion, and $1.88 billion on $2.38 billion respectively.

CE/Mobility only pulls in slightly more revenue and has slightly lower losses ($14 million in and $48 million out in 2001), and Xbox has resulted in a revenue boost plus a substantially increased loss for Home and Entertainment (the loss was $68 million on $236 million in 2001).

Of course, you don't have to take their word for it; just check out Microsoft's recent SEC filings. It seems that Windows and Office pay the rent for all of Microsoft's other endeavors. I guess that's one of the hundreds of perks of illegally abusing your monopoly!