October 5, 2001

Open Source stock report: Don't say the 'R' word

Author: JT Smith

- By Dan Berkes -
Stocks soared on Friday, edging closer to their post-attack closing levels, thanks to the President George W. Bush's plan to offer $60 billion in tax cuts to postpone the recession. Wind River explains the why behind laying off its FreeBSD guys, Sun, HP announce layoffs aplenty, IBM's Regatta sets sail, and TiVo gets hit with another lawsuit, only this time it isn't from angry shareholders. Plus: Apple pisses off its retail channel.The U.S. Federal Reserve's interest rate cuts didn't quite do the trick, now President Bush has stepped in with his plans to salvage the American economy. Bush today proposed $60 billion in new tax cuts to help Americans and the economy recover from the financial fallout of the air attacks. The president wants Congress to make that $60 billion, which is currently set aside for emergency spending, available to taxpayers in the form of tax relief for moderate and low-income workers, by repealing the alternative minimum tax for companies, and allowing firms to use enhanced expensing for capital expenditures.

Wall Street liked what it heard, and the markets began to climb immediately after Bush's speech. The Dow Jones Industrial Average closed out the week at 9,119.77, rising by 272 points from last Friday's close. That brings the index within 545 points of its Sept. 10 closing date. Over at the Nasdaq, the composite went into the weekend at 1,605, gaining 107 points from last week. Nasdaq is now 90 points away from its Sept. 10 close.

IBM's Regatta sets sail
The code name was Regatta, the official product name is the p690, and it's the latest addition to IBM's line of high-end servers. Big Blue executives claim the p690 will outperform Sun's Fire 15K, but cost only half the price of that model. The new server uses the Power4 chips, which somehow manages to double the amount of transistors on the same amount of silicon used by other chips, and consumes less power to run its complex computing tasks. p690's price tag is $450,000 to $1.8 million depending on configuration, and will ship in December.

IBM is confident that its new servers will sell nicely, but it's still worried that the increasing gloom in the global economic markets could hamper sales. A day before the p690 announcement, the company announced fourth-quarter financing incentives for customers, offering a 90-day deferred payment plan and 5.1 interest rate.

Sun's big deal
Sun Microsystems announced on Tuesday that it landed a $100 million deal with Rupert Murdoch's News Corp. to provide that company with Unix-based servers and storage systems over the next two years. Sun will be the media giant's preferred vendor for servers running Unix operating systems for the corporate parents and its diverse range of movie, television, and news subsidiaries.

StarOffice users and potential users were informed that a bouncing baby beta of version 6.0 was available for download. StarOffice is Sun's suite of office productivity software, including a word processor, spreadsheet editor, HTML editor, and for good measure, Web and email services. New features include support for XML, the addition of better import and export filters for Microsoft Office documents (including those created with office XP), better dialog boxes, and support for StarSuite, the Asian language versions of StarOffice, released in Korean, Japanese, and Chinese (simplified and traditional). General release of 6.0 is scheduled for the first half of next year.

Not all the news this week from Sun was cheerful. On Friday, the company said that wider than expected fiscal first quarter losses and the state of the post-Sept. 11 financial markets would result in slashing 9 percent, or about 4,000, of its jobs.

Sun made muted noises late this summer about wider quarterly losses. With the time to face the music drawing closer, the company said revenues would miss Wall Street's expectations by $600 million, and that a return to profitability may not happen until next summer.

Wind River blows away FreeBSD developers
Wind River Systems, which purchased BSDi's software assets earlier this year, has laid off its FreeBSD development team. Former BSDi employee Nik Rivers wrote up a question and answer session he conducted with Wind River's PR folks, and it's posted on fellow OSDN site Slashdot. The answers clarify some community concerns about what would happen to the FreeBSD trademark and related intellectual property.

As far as the layoffs go, the company said it chose to "divest itself of the FreeBSD project" after an unsuccessful search for a corporate sponsor. The layoffs, said the anonymous PR department spokesperson, were a "final option."

HP to employees: Worry
Hewlett-Packard told employees this week that more job cuts are likely to happen
before the completion of its merger with Compaq. That's in addition to the 7,000
job cuts announced by the company before the HP-Compaq merger story made
headlines. Post-merger, post-layoff employees won't be able to breathe easier, as
the combined companies have also said they will then shed another 10 percent,
or about 15,000 jobs, after the merger.

By the way, that merger has lost $8 billion in value since it was announced with great fanfare on Sept. 4.

Apple expands retail chain
Apple Computer is expanding its chain of retail stores with the opening of its
latest branch in Palo Alto, Calif. The newest store is the company's first
consumer outlet in northern California, and the first in Apple's home region of
the San Francisco Bay Area. Company executives say they're pleased with the
results of their fledgling retail empire, and that the stores are helping to
attract new customers, as well as win back those users who have switched to
other operating systems.

Long-time Apple resellers are not quite as happy with the performance of the new
stores. Some Mac stores within the retail footprint of new Apple outlets have
accused the company of delaying shipments and rationing new products to
third-party retailers, giving company-owned stores an unfair competitive

Pause Technology: And now, a message from our lawyers
Who the heck is Pause Technology? Within the context of the Open Source stock report, they're the folks giving grief to set-top maker TiVo. Seems that Pause owns a patent covering the recording and -- as that clever company name suggests -- pausing of live television broadcasts via a digital recording system. TiVo, which just happens to make and sell Linux-powered set-top boxes and markets its key feature as being able to pause and record live TV, is now the defendant in a patent-infringement lawsuit initiated by Pause.

Pause Technology says it has been trying to talk with TiVo about the issue since April 2000, but received no response from the company. Motorola and other digital recording device makers have already licensed the technology for their own product lines, due to hit the market early next year. For those who look up such things at the patent office, the relevant Pause patent is U.S. Reissue Patent no. 36,801.

Here's how Open Source and other selected stocks performed this week:

Company Name Symbol 10/05 Close 09/28 Close
Apple AAPL 16.14 15.51
Borland Software Int'l BORL 9.65 8.10
Caldera International CALD 0.25 0.25
EBIZ Enterprises EBIZ.OB 0.02 0.03
Hewlett-Packard HWP 16.45 16.05
IBM IBM 98.02 92.30
MandrakeSoft 4477.PA e4.25 e6.18
Red Hat RHAT 3.55 3.50
Sun Microsystems SUNW 9.87 8.27
TiVo TIVO 3.69 3.32
VA Linux Systems LNUX 1.13 1.05
Wind River Systems WIND 12.25 10.50


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