October 26, 2001

Open Source stock report: Borland's fortunes drop, IBM and Sun duke it out

Author: JT Smith

- By Dan Berkes -
Nasdaq and Dow make major gains from last week, helped in part by inoffensive economic reports. Borland revenues plummet, Big Blue and Sun wage war for server mind and market share, and Apple shows off its new iPod. Oh, and rumor has it that some company near Seattle released an operating system.The Nasdaq's composite index was off six and a half points from Thursday, ending the week at 1,768.96. That minor loss didn't offset a gain of nearly 100 points over last Friday's 1,671 point closing. Over at the Dow Jones Industrial Index, Friday's business closed at 9,545.17, 82 points better than Thursday, and more than 300 points better than last Friday.

Markets were mixed on today's session as investors reacted to the latest numbers from two economic reports. The University of Michigan's consumer sentiment index is at 82.7 for the month of October, slightly lower than the 83.4 preliminary report but somewhat better than the 81.8 reported for the month of September.

Next up was a report revealing housing purchase data for September. Home sales fell by 1.4 percent for the month, coming in for an estimated annual sales pace of 864,000 units. The numbers were 4,000 stronger than early estimates, but not quite as good as the 898,000 analysts expected in August.

Both reports showed nothing spectacular, but they didn't show anything particularly devastating, so the Wall Street herd continued on its spending spree.

Borland runs the numbers
Borland Software Corp. reported sharply lower profits for its most recent third quarter, announcing net income of $4.7 million or 6 cents a share, compared with the previous third quarter net income of $11.4 million or 17 cents per share. Revenues jumped 16 percent to $55 million from $47.6 million a year ago. Borland cited the Sept. 11 attacks for the lower performance.

Red Hat ships latest distribution
Red Hat, Inc. announced that its Red Hat Linux 7.2 and Red Hat Linux Professional products are now available for purchase in stores. The 7.2 version of Red Hat's Linux distribution sport the 2.4.7 Linux kernel, ext3 journaling file system, and improved network configuration, user management, and hardware trouble-shooting features. Available wherever copious amounts of shrink-wrapped software are sold.

New mainframes from IBM
Thanks to Linux, Big Blue's mainframe offerings have enjoyed quite a resurgence in popularity. The company continues to expand its big iron product line, and this week introduced the world to its latest bouncing baby, the eServer z900. This latest iteration of the z900 family, according to IBM's PR mill, is the first mainframe with the ability to perform 3,850 transactions per second.

The company continues to battle with its competitors in the lower-end server market -- primarily Sun Microsystems. IBM is betting that users will flock to mid-range servers based on its new "Regatta" Power4 microprocessors when combined with a four-digit price tag, as opposed to the sobering five figures for similar offerings from Sun.

Sun's new SPARCs
Sun Microsystems didn't take too long to respond to IBM's offerings with its own announcement. Actually, the announcement hasn't happened yet, but this press release says that the company will raise the curtain on new UltraSPARC III servers on Monday morning. "The new entry-level servers offer superior compute power below Wintel price points."

New hardware from Apple
Apple Computer this week entered the consumer electronics market with the
release of its new iPod MP3 player. The slim silver device sports a 5GB hard
drive to store up to 1,000 CD-quality songs, a FireWire connection for fast
computer-to-iPod data transfers, and a rechargeable battery that can last for up
to 10 hours of continuous music play.

The company is hoping that the Mac faithful will flock to the device, and most
Apple-watchers tend to agree with that statement. Priced about $150 higher than
the most popular digital music players on the market, it's going to be tough for
the company to convince non-Mac users to adopt iPod.

Here's how Open Source and related stocks ended the week:

Company Name Symbol 10/26 Close 10/19 Close
Apple AAPL 18.67 18.30
Borland Software Int'l BORL 12.09 11.30
Caldera International CALD 0.30 0.30
Hewlett Packard HWP 17.85 18.27
IBM IBM 111.16 102.65
MandrakeSoft 4477.PA e2.61 e2.61
Red Hat RHAT 4.88 3.99
Sun Microsystems SUNW 10.40 8.83
TiVo TIVO 5.38 5.65
VA Linux Systems LNUX 1.45 1.29
Wind River Systems WIND 15.70 14.65

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