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Business Week: Why Corel’s Sudden Liftoff Could Quickly Return to Earth

Oddly, its stock got a boost from Sun’s announcement of a
free software suite that ultimately could hurt Corel
badly.

“It had to happen. The same weird things that sent Internet
stocks skyward are now infecting stocks that are associated with
Linux — the upstart open-source operating system that many view as
a viable competitor to Microsoft’s NT operating system. So far this
month we’ve had an initial public offering for software distributor
Red Hat (RHAT) that quadrupled in its first day, frantic rumors of
other imminent IPOs from Linux companies like hardware manufacturer
VA Research, and a host of also-ran stocks that have gotten a boost
thanks to obscure connections with Linux…”

“Corel has struggled with margins for a long time,” says Nutmeg
Securities analyst Jean W. Orr, who rates the stock a buy for
speculative investors. But Orr also figures that “in the past year,
WordPerfect has been producing more revenue and profit than ever
before.”

Complete
Story