Shares in Corel slid by as much as 5% on Monday after the struggling Canadian software developer said it may sell its Linux product line in a corporate review of operations.
Corel, best known for its WordPerfect and CorelDRAW software, sales of which are slumping, entered the Linux sector last year saying it promised a substantial new revenue stream.
Linux is an alternative computer operating system to Microsoft`s market-dominating Windows.
Corel`s former chief executive, Michael Cowpland, who resigned from the company in August, had predicted Linux sales of $20 million this year. Corel has sold $6.1 million in Linux products in the past nine months.
Corel said as part of a recently started corporate review that its Linux business unit must be bigger to be successful.
The company is considering an acquisition of technology to add to the Linux unit, or its sale, a spokeswoman said. A decision will be announced in December or January.
Corel is reviewing all of its operations in a push to return to profit, said spokeswoman Anne Vis, and Linux represents just one element of the company`s business.
The company cut 21% of its staff, or 320 employees, this summer as part of a move to save $40 million annually.
Linux is an open-source operating system that supporters claim is more stable and flexible than Windows.
Corel has developed a range of Linux products, including a desktop operating system and Linux versions of its software products.
Former market darlings, Linux firms now face hard times. Most recently, VA Linux Systems warned its first-quarter sales would suffer due to widespread failure from dot.com companies. Coupled with mediocre sales growth at Red Hat, analysts said that demand was not growing as quickly as hoped.
Corel, which had $11.6 million in cash and cash equivalents at the close of its third quarter, got a $135-million cash injection from Microsoft in October under an product development alliance.
Shares in Corel dropped as low as C$5.05 on the Toronto Stock Exchange on Monday before rebounding to C$5.20, a drop of 15 Canadian cents, in afternoon trade. Stock in Corel peaked at C$64.65 last December amid a Linux frenzy on the markets.
On Nasdaq, Corel stock dipped to $3-5/16, a loss of 2/16.
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