June 8, 2001

Open Source stock report: Caution, computer glitches make for mixed week

Author: JT Smith

- By Dan Berkes -
The word of the week was caution, as investors wait for companies to revise their earning estimates to present a more realistic picture of expected profits and revenues. That, and a computer problem on the New York Stock Exchange led to a mixed bag for tech stocks this week.In addition to skittish investors playing it safe, end of the week trading was hampered by a computer glitch on the New York Stock Exchange that halted trading for four hours on Friday. The NYSE has installed new trading software during the night that caused transaction failures for half of the floor that morning. The snafu had a ripple effect on smaller exchanges, forcing the Chicago Board Options Exchange, the American Stock Exchange, and the Philadelphia Stock Exchange to partially or completely halt all trading for shorter periods of time. Nasdaq suffered a similar 20-minute outage during trading earlier this week.

End result: The Big Board traded at less than 60% of normal volume, with the Dow closing at 10,977.00 points, down 113 points from the previous day of business, but minus only 13 points from last Friday's close. The Nasdaq shot down 48 points from Thursday to close at 2,215.10, but gained 66 points from last Friday, when it closed at 2,110.49.

HP: Slowdown is global

  • Leading the slump in technical stocks this week was Hewlett-Packard's announcement the slowdown in IT spending was not confined to North America and Europe. The company says the global purchasing slowdown will result in a very conservative third-quarter earnings estimate announcement.

Kind words for Sun

  • Sun Microsystems received a healthy midweek bounce in heavy trading as the Street took heart in a research memo from Goldman Sachs stating that, while the company still has a long way to go, the worst of its "externally induced slowing" of business is now behind it.

Caldera runs the numbers

  • Caldera International Inc. announced its second quarter results on Wednesday. Revenues were reported at $1.6 million, up 17 percent from last year's second quarter, with a net loss of $11.7 million, or 0.29 per share, compared with 2Q2K's loss of $9.2 million, or 0.32 per share. Caldera stated that $4.3 million of this quarter's loss was due to a "write-down of investments," and the company predicts total revenues between $42 million and $46 million for the 2001 fiscal year.

Lawsuit watch

  • Law firm Wolf Haldenstein Adler Freeman & Herz LLP have filed a class action lawsuit in United States District Court for the Southern District of New York on behalf of purchasers of IPO securities since March 1997. Titled Shives v. Bank of America Securities LLC, 01 Civ. 4596 (SAS), the case alleges that some of Wall Street's largest underwriters, including Credit Suisse First Boston, Merill Lynch, and Salomon Smith Barney, conspired to defraud investors by requiring them to purchase shares of manipulated securities in order to purchase shares in various initial public offerings, including the IPOs of VA Linux Systems and Red Hat. NewsForge is operated by OSDN, a subsidiary of VA Linux.

Will IBM hit the escape key?

  • No formal announcement has been made, but there is speculation that IBM may ditch its personal computer division. Faced with a shrinking market share, almost no presence in brick-and-mortar retail outlets, and a division loss of $58 million for the first quarter of this year, it's entirely possible that speculation will become reality.

Koreans show Red Hat the door

  • Two Korean Linux companies are severing ties with Red Hat Linux. LinuxOne (no relation to the U.S. company of the same name) and Linux Korea say the price of doing business with Red Hat far outweighs the benefits they see from the partnership.

Here's how Open Source and related technology stocks did this week:

Company Name Symbol 6/08 Close 6/01 Close
Apple AAPL 21.32 20.89
Borland Software Int'l BORL 13.78 10.64
Caldera International CALD 1.77 1.74
EBIZ Enterprises EBIZ.OB 0.55 0.80
Hewlett Packard HWP 28.54 29.25
IBM IBM 116.10 112.89
Merlin Software Tech. MLSW.OB 0.16 0.25
Red Hat RHAT 5.37 5.34
Sun Microsystems SUNW 17.01 16.63
TiVo TIVO 8.40 8.61
VA Linux Systems LNUX 3.63 3.85
Wind River Systems WIND 24.30 22.74


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