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The company doesn't plan to cut back on any services or product lines; instead, it'll make do with fewer people.

Additionally, CTO Drew Spencer and chief legal counsel Harrison Colter are leaving the company. Both men will continue to consult for Caldera on a part-time basis. Opinder Bawa, Caldera's IT v.p., will take over the bulk of Spencer's duties, while Colter will continue to manage Caldera's legal work as an outside counsel.

While unhappy to be losing people, Love remains upbeat. "It hurts, but the worldwide IT market, especially in Europe, made this a necessary step to protect shareholder value in Caldera." That said, Love continues, "People are continuing to deploy business systems with both Unix and Linux."

But Alan Gillen, IDC's research manager for systems software, counters: "The Unix-on-Intel market, which makes up 90% of Caldera's business, has been a shrinking market. It's a tough place to be, we don't expect a robust recovery in the Unix market anytime soon."

On the other hand, Gillen believes that Unix on Intel has reached "a new waterline in the industry, so that, while there will be market share consolidation -- what we got now is what we will have for the next year." For Caldera, the real danger he sees is that the company is strongest with small- to medium-sized businesses and those kinds of companies are "very susceptible to Linux."

Love disagrees, saying that "Linux companies are also showing declining sells. Everyone's customers are having to cut back."

As for Linux, Love points to Caldera's Volution Exchange replacement program and cross-platform network management program, its bringing together of Linux and Unix, and training and support services for most commercial varieties of Linux to show that Caldera is adding strength in both network and Linux services.

Financially, Love says as painful as the layoffs are, they will bring the company to within $2 million to $3 million of profitability, and Caldera has more than enough cash to continue operations. Unlike its former sibling company, Lineo, Love is certain that Caldera won't need any kind of emergency management or financial help from primary backer Canopy.

While Gillen believes that Caldera must do more to turn the corner into profitability than reducing costs, he also notes that Caldera's Unix installed base creates business for the company. "It's not that people are going to rip out old Unix, when something works they hang on to it forever. Even if Caldera doesn't sell another box, there will be maintenance and support work for Caldera Unix for the next 15 years."

Looking ahead, though, "like Novell, they need to move new operating system licenses to get independent software vendors interested," he adds. Otherwise, "they're in a Catch-22, with no license growth, there will be no new software products, and it will be very hard to turn the downward cycle around."

Can price-cutting, self-made applications like the Volution line, customer and channel loyalty, and its combination of Unix and Linux offerings bring Caldera out of the woods? The stock market, which slammed Caldera with a 25% price drop today, doesn't see it. But it will be the small-business market that determines whether Caldera shrinks to a service and support company for its installed base or rises up to become a profitable service and operating system company for Unix and Linux business users.

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