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New Corel Repositions for Growth, To Spin Off Linux

Press release from the issuing company

Ottawa, Canada – Today, Corel Corporation (NASDAQ: CORL, TSE: COR) is pleased to announce the details of a new corporate strategy designed to reposition the company for long-term growth and profitability. Corel will leverage its solid foundation as a global technology leader with over 15 years of experience to enhance its relationships with existing customers while targeting new customers in emerging markets fueled by the rapid expansion of the Web and the increasing demand for graphics-rich visual communication. "This strategy represents the start of an important new chapter in Corel's history. It is a long-term program based on three key principles that will form the basis of Corel's business philosophy for the future: Dynamic Technology, Dedication to the Customer and Disciplined Financial Management," said Derek J. Burney, president and CEO of Corel Corporation. " Our blueprint for the future includes a solid foundation, a clear plan, and space for growth through strategic investments and acquisitions. We are committed to success and we believe that this plan, properly executed, will result in Corel's return to profitability by the third quarter of this fiscal year. By building on our core strengths and directing our efforts strategically, we have the opportunity to grow the company's revenues at a compounded annual growth rate of at least 20% over the next three years." These targets are based on the objectives that have been established for each of Corel's product groups: Linux®: The company's expanding vision for Linux® includes providing customers with a bundled solution that minimizes the total cost of ownership and eliminates integration issues. To realize its Linux vision and to increase the value of its Linux equity for both customers and shareholders, Corel is actively pursuing opportunities to allow it to spin off the Linux Distribution element of its Linux division while retaining an interest in the new prospective company. Corel will continue to develop brand name applications for the Linux operating system including WordPerfect® Office for Linux and CorelDRAW® for Linux. WordPerfect®: Corel's flagship office suite will generate significant revenues and contribution for the company. With its long-standing reputation for word-processing excellence, WordPerfect® remains the choice of professional users who work extensively on longer, format-rich documents. Its stability and unique features are renowned by users in the legal community and in government offices where specialized formatting and stability are critical to productivity. Corel recognizes that there are untapped opportunities within its existing user base of dedicated WordPerfect customers and that there is a strong business in satisfying this community. Corel will further enhance its relationship with its WordPerfect customers to ensure that their priorities are addressed with each release and update to the product. Over 70% of the new features and enhancements planned for WordPerfect® Office 2002 are based directly on client feedback. Corel's commitment to its WordPerfect customers will be reflected in targeted sales and marketing programs that will reward customer loyalty through preferred pricing and licensing options. In addition, the company will leverage premium sales channels to service its professional customers in the small-to-medium sized corporate market. The company is committed to supporting profitable business practices. Corel will invest heavily in campaigns to support English versions of WordPerfect, both in North America and in International markets since these are products for which there is a demonstrated customer demand. This strategic investment is consistent with the company's vision for future profitability. Creative Products: The company's creative products will provide the primary engine for revenue growth. Corel will investigate and identify opportunities in new and fast growing markets fueled by the increasing demand for Web content and graphics, a market expected to reach $2.9 billion by 2003. Corel will use its expertise in the graphics arena to capitalize on these opportunities. The company has established a framework for the future that will unfold in three phases: Phase 1: Over the next twelve months, Corel has the opportunity to significantly grow its creative products revenues by successfully: * upgrading users to CorelDRAW® 10 Graphics Suite * launching CorelDRAW 10 Graphics Suite for Macintosh® * releasing new versions of Corel® KnockOut masking software, Corel® Painter™, Bryce® and KPT® * implementing targeted sales and marketing programs for new vertical markets Phase 2: Over the next one to two years, Corel will expand the scope and reach of its current suite of creative products through strategic investments in infrastructure and new growth opportunities. Corel is taking steps to transform its current graphics suite to deliver creative solutions to customers who work primarily on the Web. Phase 3: Over the next two to three years, Corel's advanced technologies incubator, the New Ventures division, will investigate acquisition opportunities and new market segments where Corel can leverage its graphics software assets to generate new revenue streams for the company. In addition, by working on projects related to Microsoft's powerful new .NET framework, Corel will be better positioned to provide its customers with the most up-to-date technology as soon as it becomes available. Corel's alliance with Microsoft is part of the company's commitment to deliver applications, expanded services and content over the Web. Having successfully restructured and realigned its operations, Corel is turning its attention to the future. The strategy is the culmination of a comprehensive corporate review directed by the company's senior executive team over a period of several months.