May 18, 2001

Open Source stock report: Markets, consumer confidence up

Author: JT Smith

- By Dan Berkes -
The markets came out swinging this week, as investors regained their confidence and adpoted a longer-term view. Several Linux and Open Source-related companies announced earnings, Eazel called it quits, and IBM hinted at its next CEO.The Dow Jones industrial average and Nasdaq both gained more than 4 percent for the week by the sound of the bell on Friday. The Dow closed at 11,301.74, up 480 points. The last time the Dow closed over 11,000 was in September of last year. Nasdaq ended the week at 2,198, up 91 points from last Friday.

Analysts said investors seem to be taking a longer-term approach, and ignoring most second-quarter results. James Philburn, a Chicago-based independent market analyst says that the real market test will come in the last quarter of 2001: "If investors haven't seen [an improvement] from business by then, the markets could go back to where they were at the beginning of the year."

Not hurting the situation this week was the U.S. Federal Reserve's half-percent interest rate cut. This is the fifth reduction in as many months, and the Fed left open the possibility that further rate cuts could happen.

Running the numbers

Caldera International disclosed the terms of its SCO purchase in an 8-K filing with the SEC: $23 million in cash, 16 million shares of Caldera stock, and an $8 million IOU to be paid in yearly installments of $2 million.

Server manufacturer and Linux reseller EBIZ Enterprises, Inc. released its earnings statement on Wednesday. Revenues increased by $2.2 million to $8.4 million; net loss rose from $2.2 million to $9.9 million, mostly due to the company's recent acquisitions of Houston-based JBSi and

IBM says that its share of the U.S. server market rose 6.7 points in the first quarter of this year, to 21.3 percent of the total market. According to the almighty press release, the extra market share is thanks to IBM's new eServer product line.

Merlin Software Technologies International filed its 10Q earnings statement this week. Total sales figures for the three-month period ending March 31, 2001 were $13,497; the company incurred a net loss of $770,276 for the same period. Merlin's product line includes a cross-platform faxing program known as CommunicadoFAX, and system utility PerfectBackUP.


On Monday, Caldera International announced its purchase of Acrylis' WhatifLinux technology. According to a press release at Yahoo, the company plans to use WhatifLinux in a new software management product, named Volution Online.

Who's the next person to sit in the captain's chair on IBM's bridge? In an interview this week on CNN, Big Blue CEO Louis Gerstner hinted that Sam Palmisano, currently the company's COO and president, may be next in line. Gerstner didn't say if or when he would step aside' however, his contract with IBM ends in March 2002.

Items of interest

ZDNet has a story about the ever-elusive quest for profits in the Linux market. That profit may be in partnership: Because Linux is so easily adapted to all manner of platforms, Linux solution providers may be able to help the bottom line with -- what else -- a little cooperation from others.

Eazel, we hardly knew ye. After a short but spirited existence, the company that gave Nautilus to the Linux community officially closed its doors this week.

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

Company Name Symbol 5/18 Close 5/11 Close
Apple AAPL 23.53 22.85
Caldera International CALD 1.89 2.18
EBIZ Enterprises EBIZ.OB 0.82 0.85
Hewlett Packard HWP 29.85 26.19
IBM IBM 117.44 111.81
Merlin Softwatre Tech. MLSW.OB 0.30 0.33
Red Hat RHAT 5.82 5.80
Sun Microsystems SUNW 19.97 18.85
VA Linux Systems LNUX 4.20 4.57
Wind River Systems WIND 22.52 22.54


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