Microsoft Takes $135-Million Stake in Former Rival Corel

Microsoft Corp. is taking a $135-million stake in Corel Corp., the Canadian firm that makes WordPerfect and other software for the competing Linux operating system. Under the deal announced, Microsoft will buy 24 million Corel nonvoting convertible preferred shares at $5.63 each, making the Redmond, Wash.-based company one of Corel’s largest shareholders with a 24.6% nonvoting stake. The companies, once rivals in word-processing software and operating systems, will also settle unspecified legal issues and develop applications based on Microsoft’s Internet-based .NET initiative. Corel has been struggling to find financing since a merger deal with software developer Inprise fell through in May. Founder Michael Cowpland resigned his chief executive position in August due to financial questions plaguing the company. On Nasdaq, Corel shares were unchanged at $3.69 and Microsoft fell $1.19 to $59.13.