UTAH TECH WATCH - - by David Politis - - 2/3-5/96 Edition

After three weeks of heavy negotiating, Novell confirmed this week that it
will sell its Business Applications Division to Ottawa, Canada-based Corel
Corp.

The announcement was made on Halloween Day in the same conference room in
the Provo Park Hotel where Novell had announced that it intended to sell
the BizApps division.

In the three months since that fateful announcement, rumors and rumors of
rumors about the future of the former WordPerfect ran rampant throughout
the computer trade press, financial and industry analysts, and Happy
Valley.

At the time of the initial announcement, some 1,800 individuals employed by
Novell either worked in or for the BizApps division.

Since then, approximately 600 have been removed from the payroll, both
through voluntary and involuntary layoffs, and others through natural
attrition.

In Wednesday's noon press conference, and in the press teleconference held
earlier in the day, both Novell and Corel officials explained that between
600 and 700 Novell employees will immediately become Corel employees as a
result of the acquisition.

Which leaves the immediate future of as many as 600 Novell employees in
doubt.

According to Corel officials, the Canadian firm has already begun
evaluating the remaining BizApps employees toward the possibility of
extending job offers to upward of 200 to 300 additional individuals.

For its part, Novell will also try to place as many of the remaining
employees within its fold. But here again, there is no guarantee that all
will remain employed either by the networking software giant or the
graphics software leader to the North.

The cost

In the announcement, Corel agreed to pay slightly more than $185 million
(US) for WordPerfect, through stock (9.95 million Corel shares), $10.75
million cash, and a minimum future royalty obligation of $70 million over
the next five years.

And by the close of trading on Wednesday, stock prices for both firms had
closed up for the day.

Following the completion of the deal (which is anticipated in 30 days or
less), Novell will own just under 20 percent of Corel's outstanding
shares, making it the largest shareholder.

Accordingly, Novell has been offered a seat on Corel's board, which will
apparently be filled by Novell Executive Vice President Jeff Waxman.

Corel completed 1995 with just under $200 million in sales, while the
BizApps division finished the year at approximately $400 million.

According to Michael Cowpland, Corel founder and CEO, Corel expects the
WordPerfect product line to generate between $300 and $500 million in
sales in 1996, which if true, would at least double Corel's size.

Corel's main product is CorelDRAW, the leading graphics software package in
the Windows environment. In total, Corel has more than 5 million users
today.

For its part, WordPerfect has some 20 million customers worldwide,
including owners of PerfectOffice, WordPerfect word processing software,
and the other applications included in the PerfectOffice software suite.

Is it a good deal?

Naturally, the main question people want answered is whether or not this is
a good deal for everyone involved?

Somewhat surprisingly, my answer as I write this column is an emphatic
"Yes!"

Why? For Novell it's simple.

The sale of the WordPerfect product line rids Novell of what at best has
become a distraction for the networking company.

For my part, I can argue pretty strongly both sides of the question as to
whether or not Novell should have bought WPCorp, and how the merger could
have been done successfully.

But it's a moot point. And for now, the best thing for Novell is to sell
BizApps and move forward.

For the WordPerfect organization, it's a positive event because it teams
them with another market leader (though not as large as Novell), that is
in the same environment (business applications), that will work very hard
to make the deal succeed.

Which, unfortunately, Novell didn't (or couldn't) accomplish.

Naturally, it's also a good deal for Corel because they too are getting a
market leader, at a very good price, which could create some very
interesting synergies for Corel as it moves forward.

Unfortunately, I am convinced some additional Novell employees will end up
losing their jobs. My best guess is somewhere between 200 and 250 will be
laid off.

But in the end, most of those that get caught in this final WordPerfect
layoff will be better off a year from now. It's just the next six to 12
months that will be hard for them to get through.

A marketing communications consultant that specializes in high-tech and
health care clients, David Politis welcomes column ideas at 801-569-2592
or via the Internet at dpolitis@altatech.com.
 
 =========================================================
 From the 'New Product News' Electronic News Service on...
 AOL (Keyword = New Products) and Delphi (GO COMP PROD)
 =========================================================
 This information was processed from data provided by the
 company/author mentioned. For additional details, please
 contact them directly at the address/phone# indicated.
 Trademarks are the property of their respective owners!
 =========================================================
 All submissions for this service should be addressed to:
 BAKER ENTERPRISES,  20 Ferro Dr,  Sewell, NJ  08080  USA
 Email:   rbakerpc@aol.com   --or--   rbakerpc@delphi.com
 =========================================================
