March 17, 1997 6:45 PM ET
Corel to spin off new company
By Charles Cooper

  Corel Corp. may ultimately realize its plans to develop a network computer--but another company will sell the product.

Sources say the Ottawa-based company plans to spin off its NC development along with its videoconferencing and networking technology groups.

The move, expected to be announced tomorrow, will result in the creation of a wholly-owned subsidiary headed by Corel's current engineering vice president, Eid Eid. The sources said Corel plans to take the new company public within the next 12 to 18 months

Corel was not available for comment.

About 70 to 90 people are expected to go with the new venture, comprising about 8 percent of the company, which will also take the lead in pushing Corel's NC strategy.

"The idea to is separate the companies so Corel can focus on desktop applications and let the other company focus on network-centric computing," one source said.

Sources say Corel also expects to build its first NC with video capabilities, playing off its development work in videoconferencing and workflow development.

"When people talked to me about Corel's NC before, my assessment was that it was a trial ballon," said Chris LeTocq, an analyst with Dataquest. "Frankly, for software companies to be in the hardware business is a hard road. By doing it this way, it perhaps will make it easier [for Corel] to get external investment in an area [in which it] wouldn't want to take all the risk."

This isn't the first time Corel has flirted with hardware development, LeTocq noted. At one time, Corel also planned to develop a personal digital assistant but pulled the plug on those plans last year.

"Doing it this way makes sense," he said. "If it flies, it flies and if it doesn't, it doesn't--but it won't suck up resources if they fail."

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