Corel CEO Cowpland resigns
August 16, 2000 (IDG News Service)
Michael Cowpland resigned as president, CEO and chairman of embattled Corel Corp., to spend his time on "new start-up opportunities," according to a company statement Tuesday.
The news had been expected, according to analysts, who pointed to the company's ongoing financial struggles as evidence that a change is needed at Corel's helm.
Derek J. Burney, the company's executive vice president for engineering and chief technology officer was appointed interim CEO and president. Burney has been at Corel since 1993. Cowpland, Corel's founder, will continue to serve as a director on the board and as a technology adviser, but won't be involved in the company's operations, the Corel statement said.
In recent months, Ottawa-based Corel has weathered a series of bad-news days, including financial losses, layoffs and a failed deal to merge with U.S. development tools vendor Inprise/Borland Corp. The fear that Corel was coming close to running out of money was one of the major reasons cited for the failed merger. Word that the merger had fallen through was followed by announcements that top executives had resigned -- ironically as news came that Corel had received some much-needed financing.
Late last year, Cowpland was charged with three counts of violating Ontario securities law, allegedly using insider information about a lower-than-expected quarterly financial report for the third quarter of 1997 to sell 2.43 million shares of company stock for about $14 million. Cowpland disputed those charges [See "Corel's Cowpland Disputes Insider Charges," Oct. 14, 1999].
A published report after Cowpland's departure from Corel was announced quoted a spokesman at the Ontario Securities Commission saying that the resignation isn't related to the commission's investigation of the Corel founder.
Whatever spurred Cowpland's decision to leave, the company is in need of new leadership, analysts agreed.
"It had been expected. Corel had some relatively disappointing financial results for what was a long period of time," said Rob Enderle, a Giga Information Group Inc. analyst based in Santa Clara, Calif.
The news was, in fact, expected before now, Enderle said, adding that the securities business "put Mike under a rather substantial cloud."
Even with Cowpland's departure, a financial turnaround could be far off for the Canadian applications vendor and Linux distributor, Enderle said, because "Mike is only part of the problem at Corel." Getting the company back on track will depend on who replaces Cowpland, but finding a new CEO could prove a hard sell for the company.
"Who wants a job that could likely end their career? They'd risk being on a sinking ship. It's a precursor to what may happen at Oracle in the sense of the problems you have with a fairly visible and perhaps less restrained CEO," Enderle said, referring to Oracle Corp. chief Larry Ellison, who is known as much for his flamboyance as for his acumen as a CEO.
Chris Le Tocq, an analyst at Gartner Group Inc. in San Jose, Calif., echoed Enderle's sentiments.
"Companies take on the character of the CEO, and Corel was very much that kind of a company," he said. "It will be a very different company under someone else."
Exactly what kind of company seems up for grabs as Corel's push to become a Linux powerhouse appears in jeopardy with the failure of the planned acquisition by Inprise/Borland and because competition has already made inroads into applications running on the popular open-source operating system.
"Corel under Michael basically bet the farm on moving applications to Linux. Today, Sun has moved StarOffice to Linux and that will limit the opportunity for Corel," Le Tocq said. StarOffice is Sun Microsystems Inc.'s rival applications suite to Corel's WordPerfect software family.
"Today, Corel received another challenge [from Sun]," said Le Tocq, referring to Sun's StarOffice news announced at the LinuxWorld 2000 conference and expo in San Jose. "It's the wrong place for Mike," Le Tocq added of Cowpland's situation at Corel.
News of Cowpland's departure from Corel met with mixed reactions at LinuxWorld 2000.
"It's a big black mark on everything that's happening here today," said Chris Welsh, a self-styled "Linux zealot," from Sunnyvale, Calif. The timing of the Corel announcement with the start of the Linux show was very bad, he added.
However, Welsh was not complimentary about Corel Linux, saying, "I installed it and I uninstalled it, finding the product to be too oversimplified, effectively "baby-feeding" Linux users.
Speculation at LinuxWorld 2000 on Cowpland's permanent replacement at Corel cast up the name of Dale Fuller, Inprise/Borland's interim president and CEO. In an interview with IDG News Service last month, Fuller said that in terms of strategy, the merger between Corel and Inprise "was a very, very sound deal, it still is today."
Trading of Corel shares was halted in Toronto about an hour before Cowpland's announcement.
James Niccolai of IDG News Service contributed to this report.)
Related stories:
- Corel cuts workforce by one-fifth, June 5, 2000
- Corel reports another loss, says more are likely, June 21, 2000
- Wary Inprise jilts Corel , May 22, 2000