OTTAWA -- In another step on its path to push Linux into the mainstream, Corel Corp. said Wednesday it will buy a 30-percent stake in Newlix Corp., a privately held Linux startup.
Corel did not release terms of its deal with the Ottawa firm. Newlix is developing software based on the Linux operating system that allows a network server, connecting up to 50 personal computers, to handle printing, email, and Internet connections.
The investment in tiny Newlix, which has eight full-time staffers and was founded late last year, marks the most recent in a string of Linux investments for Corel.
Ottawa-based Corel, which was best known for its office and graphics software until last year, has staged a market revival on its Linux efforts.
Riding a Linux rocket, Corel stock soared from C$9.90 on the Toronto Stock Exchange on November 1 to a new intra-day high of C$64.65 on December 9.
Investors are optimistic that the free operating system could be a credible challenge to Microsoft's dominant Windows NT.
Corel hopes its easy-to-use desktop version of Linux launched in November will move the operating system into a wider market. Corel could then reap sales from Linux versions of its office and graphics software.
Alongside its internal development efforts, Corel has been acquiring stakes in other Linux developers.
"They are doing the smart thing ... in an emerging hot space like this," said Duncan Stewart, fund manager at Tera Capital Corp. in Toronto. "It's the spaghetti test -- you throw stuff against the wall and see what sticks."
Corel, which has made three other Linux investments, has not disclosed the terms of those deals. In December, it purchased a one-third stake in LinuxForce Inc., a Philadelphia-based Linux support and services firm.
Corel also has a 25 percent stake in Ottawa-based Rebel.com Inc., which last January bought Corel's Netwinder computer line. Rebel.com, which is expected to go public this year, has an office server that runs on Linux.
Corel swapped its Java business with GraphOn Corp. last January for a 20 percent stake in the California firm. Corel is using GraphOn software to translate Windows applications on an upcoming version of Linux it is developing.
"They just want to have almost a little mini-Linux venture capital fund. And that's not a dumb way of doing it," Stewart said. "You buy 10 things and nine of them are worthless -- but the one of them that isn't makes it all worth while."
Investors had little reaction to the latest deal, which may stem from its small size and uncertain outcome, Stewart said. Corel did, however, fare well in contrast to some Linux plays such as VA Linux Systems Inc., and Andover.Net Inc., whose stock prices fell Wednesday.
Corel stock closed at C$29.35 on the Toronto bourse Wednesday, a gain of C$1.75, while on Nasdaq the issue ended up 14/16 to close at 19-15/16.
