Microsoft said today it does not intend to sell off its stake in struggling software firm Corel, despite the filing by Corel of a registration for 24 million Series A shares to be converted to common shares which can then be registered for sale by Microsoft.
A Microsoft UK spokeswoman said that the registration is just a sign that Microsoft is keeping its options open. "It just keeps flexibility for the future of Microsoft's strategic investments," she said. "It does not mean Microsoft intends to sell off its stake in Corel."
It is reported that these shares would be sold at $2.56 each. This would make Microsoft just $61.5m, representing a loss of over 50 percent on its investment of $135m.
This spokeswoman said the registration was agreed by both parties and does not affect the work Corel is doing with Microsoft.
News of the registration comes shortly after the Justice Department's antitrust division announced an investigation into Microsoft's acquisition last October of a 24.6 percent stake in Ottawa-based Corel. Legal experts have warned that Microsoft's $135m investment in Corel could be "dangerous" to competition.
Microsoft's legal team is currently preparing arguments to be heard by the Appeals Court in the District of Columbia at the end of the month.
Corel's WordPerfect application competes directly with Microsoft's Office suite and Corel has invested in creating versions of this and CorelDraw for the Linux operating system. It was widely assumed that Microsoft's investment was part of a strategy to help bring its .Net strategy to Linux, which is particularly successful as an Internet operating system. It may also have been to help its key competitor out of trouble at a time when the Justice department was probing antitrust allegations.
Dan Kuznetsky, vice president of systems software research at IDC, reckons that Microsoft may still have too much of an vested interest in Corel to drop its stake anytime soon. "I can see them selling off when they feel they no longer have an interest," he says. "I have a suspicion that won't happen until .Net has been constructed to bring it to Linux."
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