July 13, 2001

Open Source stock report: Markets continue slow gain

Author: JT Smith

- By Dan Berkes -
Slow but steady is the order of this week, as investors kept the markets on an even keel, betting on brighter corporate earnings and a better overall economic outlook for the U.S. economy. Far from the unbridled confidence of past years, traders seem to have realized that any changes to the financial outlook will be in the extreme, but visible, long term. Like it or hate it, and I'm guessing that most Open Source supporters will fall into the latter category, as goes Microsoft, so goes the rest of the tech sector. While Intel and other silicon stocks made some positive noises about next year's earnings, the markets cheered up on news that Microsoft would allow its OEM partners to eliminate or add additional icons and programs to its Windows XP desktop, and on news that New Mexico has dropped out of the lawsuit filed by 18 American states against the Redmond, Wash., software maker.

The Dow Jones Industrial Average closed this week at 10.539.06, up 60 points from Thursday, and up 287 points from last Friday when it closed at 10,252.68. Nasdaq posted similar modest gains, ringing Friday's bell at 2,084.79, up 80 points from 2004.16 on July 6.

Red Hat runs the numbers
According to the latest 10Q quarterly report from North Carolina-based Red Hat Linux, total company revenue for the three-month period ending May 31 increased by 15.5% from the same reporting period in 2000. Expenses were also on the rise as Red Hat's net loss increased from 78.6 percent, for this quarter last year, to 107.6 percent for this quarter. Red Hat closed the week at 3.92, down from 4.03 on July 6.

EBIZ soon to be OUTOFBIZ?
Computer systems developer and online commerce provider EBIZ Enterprises is in dire straits, says company CEO David Shaw. In an open letter to shareholders, Shaw revealed that many of the financial promises made to EBIZ since the beginning of this year have not materialized: "Simply put, more working capital needs to be invested in the company immediately. Without additional working capital the company is not viable as it is currently structured," wrote Shaw. While Shaw deserves some brownie points for brutal honesty, the notice predictably spooked shareholders who slashed the price of this penny stock by 50 percent from last week, closing EBIZ.OB at 0.11 today.

Caldera and the lawyers
Caldera joins the ranks of Red Hat and OSDN/NewsForge parent VA Linux to be sued by shareholders. On Thursday, the law firm Bernstein, Liebhard & Lifshitz announced that a securities class action lawsuit was initiated on behalf of individuals who purchased CALD shares between March and December of 2000. The complaint alleges that Caldera's prospectus "contained materially false and misleading information and failed to disclose material information." On Friday, the first full day of trading after the announcement, shares of CALD closed at 1.32, up 0.01 from Thursday, but down 0.08 from last Friday.

Apple does Windows
On Monday, Apple Computer announced it would purchase DVD software maker Spruce Technologies. Based in San Jose, Calif., Spruce makes Windows-based DVD authoring software for consumer and professional video markets. An email statement from Apple was a bit vague on what, exactly, the company plans to do with its new purchase, saying only that "this acquisition further enforces Apple's position as the preeminent platform for DVD authoring." On the day of the announcement, shares in AAPL closed up 0.67 to 22.70 from last Friday's 22.03, and up 2.82 for the entire week, ending the week at 24.85.

iMacWorld New York
Will more information on Apple's plans for Spruce surface next week at the MacWorld Expo in New York? Not likely, so what will CEO Steve Jobs unveil during his keynote speech this time around? Look for a new iMac or two, says this report at CNET News.com. There's currently a 10-day wait for all but the lowest-priced model of the candy-colored computers at Apple's online store, and independent distributors report their stockpiles of iMacs are running out, all sure signs that something new is waiting in the wings.

Adobe won't take Manhattan
With the current state of the economy, it's not really news when a company pulls out of sponsoring a booth at trade shows. When that company is Adobe and the show is MacWorld, industry observers sit up and take notice. Adobe insiders say the company pulled its support of the show for purely financial reasons, and not because of any imagined tiff between the two companies. Announcing to the world that one's company was too poor to make a trade show appearance may not have been the best strategy; ADBE closed down at 40.37 today, down 2.99 from last Friday's bell.

Big Blue makes cutbacks
IBM this week eliminated 150 jobs in its personal computer division, and according to union leaders, another 1,000 positions from across the company may be elliminated. With just 6 percent of the PC market and a $58 million 1Q loss for the PC division, the cutbacks from this area of the company seemed all but inevitable. IBM ended the week at 108.53, up 2.03 from the close of business on July 6.

TiVo gazes into its crystal ball
Linux-based digital television recording company TiVo backed up its fiscal outlook for the coming year, and called for a jump in revenues for 2003, when it expects to see returns from business ventures outside of its monthly TV listing subscriber base. For 2002, the company predicts an operating loss of $155 million on revenues of at least $20 million, and expects that loss to shrink to at most $106 million by the start of 2003. Investors seemed to like what they heard, and ended the company this week at 6.71, up from 5.30 at least week's close of business.

On the calendar
Tuesday, July 17 -- Apple Computer will announce its third quarter earnings during a conference call, scheduled for 5:00 p.m. Eastern time.
Thursday, July 19 -- Borland Software International's second quarter earnings conference call kicks off at 5:00 p.m. Eastern time.

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

Company Name Symbol 7/13 Close 7/6 Close
Apple AAPL 24.85 22.03
Borland Software Int'l BORL 15.99 14.11
Caldera International CALD 1.32 1.40
EBIZ Enterprises EBIZ.OB 0.11 0.22
Hewlett Packard HWP 27.98 26.43
IBM IBM 108.53 106.50
Merlin Software Tech. MLSW.OB 0.31 0.20
Red Hat RHAT 3.92 4.03
Sun Microsystems SUNW 15.64 13.68
TiVo TIVO 6.71 5.30
VA Linux Systems LNUX 2.75 2.86
Wind River Systems WIND 16.18 14.96


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