Corel to spin off Linux division

Corel has confirmed that it will spin off its Linux business as part of a new corporate strategy aimed at "long-term growth and profitability".

The troubled software developer, best known for its word processing product WordPerfect, said it is "actively pursuing" opportunities to allow it to spin off its Linux division but that it would retain an interest in the new company. Corel was effectively saved from bankruptcy by a £135m investment by Microsoft last autumn.

The company said it would continue to develop applications for the operating system including WordPerfect Office for Linux and CorelDraw for Linux.

Corel said that it was creative products, specifically its web content and graphics software CorelDraw, that would take the firm forward.

Over the next year, the company said it will grow revenue in this area by upgrading users to CorelDraw 10 Graphics Suite, launching a CorelDraw 10 Graphics suite for the Mac and releasing new versions of its KnockOut, Painter, Bryce and KPT software.

Although Corel was expected to outline further details of its relationship with Microsoft, it said only that it would be working with the software giant on "projects related to the .Net framework".

Industry watchers had predicted that Corel would opt for a Microsoft-centric strategy, and sell off its word processing product, WordPerfect.

However, the company re-affirmed its commitment to WordPerfect 2002, saying there were "untapped opportunities" within its WordPerfect user base and that there was a "strong business in serving this community".

Corel said it would ensure that customers' priorities are addressed with each new release and update. Over 70 per cent of the new features planned for WordPerfect Office 2002 are based directly on customer feedback, according to the company.

It also promised targeted marketing campaigns and customer loyalty discounts. However, Analysts said the move may not make economic sense for Corel.

Tony Lock, senior analyst at Bloor Research, said: "Go back five, six, seven years and WordPerfect was pretty close to being number one. It has suffered over the years because of the Microsoft effect. I don't know if it makes economic sense to continue," he explained.