ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, February 1, 1996 TAG: 9602010026
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: SALT LAKE CITY
SOURCE: Associated Press
THE COMPANY is confident of a payoff in the combination of its advertising skills and graphics software expertise with new on-line features WordPerfect has developed.
Corel Corp. bought the WordPerfect business of Novell Inc. for $115 million Wednesday, relieving Novell of an acquisition it had bobbled and positioning itself to compete with Microsoft Corp. in sales of the most popular office software products.
WordPerfect, once one of the brightest stars in the software industry, faces a hard climb to take back market position from Microsoft.
But Corel chief executive Michael Cowpland is confident of a payoff in the combination of its advertising skills and graphics software expertise with new on-line features WordPerfect has developed for its main products.
``It will enable us to increase our market share quite rapidly,'' he said.
In addition to the cash and stock offer, Corel will license Novell's GroupWise and Envoy communications software and other technologies for a minimum royalty payment of $70 million over the next five years, bringing the deal's value to at least $185 million.
Investors seemed happy with the transaction. Corel stock closed up 811/4 cents to $11.371/2 and Novell rose $1 to $13.50, both on Nasdaq.
Analysts said Novell got far less for WordPerfect than the $1 billion it paid two years ago when then-chairman and chief executive Ray Noorda envisioned building a company that would compete with Microsoft in most areas of personal computer software.
Novell is the leading seller of software that links PCs in networks. Chief executive Bob Frankenberg said the sale ``allows Novell to focus on what we do best, and that's networking.''
Corel intends to add its name to the software products - Corel WordPerfect, Corel Perfect Office and Corel QuattroPro - and package them in suites with its top-selling CorelDraw graphics software. New versions of the first two, due out in April, will have Internet capabilities, Cowpland said.
Microsoft is the software suite leader. Its Microsoft Office product had a 86.5 percent market share last year, compared with Novell-WordPerfect's 5.4 percent. In individual sales, WordPerfect once dominated the word-processing market. Its market share last year was 47.9 percent, only slightly ahead of Microsoft Word with 44.5 percent.
Corel, which had sales of $196 million in the year ending in November, could triple in size with the acquisition, Cowpland said. The WordPerfect operation had sales of $400 million last year, and he said it could do up to $500 million this year.
LENGTH: Medium: 58 lines ILLUSTRATION: PHOTO: AP. Novell's chief executive Bob Frankenberg (left) andby CNBCorel's President Michael Cowpland consider it a good deal for both.
Graphic: Chart by AP.