August 17, 2001

Open Source stock report: Nasdaq drops, HP plummets

Author: JT Smith

- By Dan Berkes -
The Nasdaq took a nasty dive today, plunging into the 1800s for the first time
in months. HP earnings fall from billions to millions, Sun tells employees
to take a temporary hike, and Apple polishes its new retail empire. Plus: IBM
going Hollywood.The Nasdaq ended the week at 1867.01, down 115 points from Monday's high
of 1982.25. Nasdaq hasn't seen the 1800s since April 11 of this year,
when it closed at 1898.95. The Dow Jones Industrial Average closed at 10240.78,
losing 175 from this week's high close of 10415.91, which also happened on
Monday.

Something to shudder about: Some analysts say we're in the summer doldrums, and
that this activity is just minor league. Even HP's staggering 89 percent profit
drop couldn't shake its stock price by much. The truth of the matter is that
Wall Street is experiencing some end-of-summer lethargy, and nothing of any real
importance is expected to happen until just after Labor Day. At that point,
we'll see the true direction the economy will take, and there are plenty of
indications that it won't be pretty.

Did technology companies hit a financial bottom this past spring? That was the
consensus of analysts earlier this year, but new information suggests that the
tech slump could last for years. In a report filed by
NewsFactor
, Brett Miller, an analyst with A.G. Edwards & Sons, said, "Things
are getting worse across the technology board, and no one can say when they will
improve." Tough words to swallow for a market that's looking for a sign, any
sign, that the economy will heal itself.

Hewlett-Packard runs the numbers
HP's latest quarterly report defied analyst's expectations, falling twice as
hard as the Street had predicted. On Thursday,
the company reported
that its earnings for its fiscal third quarter were 80
percent smaller than for the same quarter just one year ago. Net profit dropped
from $1.05 billion and 51 cents per share in 2000, to just $111 million and 6
cents per share today. Profit from continuing operations totaled $218 million,
or 11 cents per share, down from $1.04 billion, or 50 cents per share.

Vacations, predictions from Sun
Sun Microsystems cheered a bit this week, as Evans Data Group announced the results of a series of studied
it conducted. According to the report, more developers will be using Sun's Java
programming language in 2002, outnumbering those using C and C++. Only a very
small portion of developers said they would consider dealing with Microsoft's
new C# language.

This week, Sun announced its latest cost-cutting measure, using a practice in vogue among tech
companies: vacation. The company will require all of
its employees to take five days of paid vacation during the calendar year. The
company hopes to shrink by 300 positions by June of next year, asking 2 percent
of its workforce to find new jobs within the company or leave.

Red Hat's results
Back to that Evans Data study: In addition to discovering that developers liked
Java, the researchers also discovered that 77.2 percent of the 300 developers
they had surveyed chose Red Had Linux as the distribution they would use for a
Web server or application Server.

Big Blue's California dreaming
IBM played proud papa this week when it showed off ASCI
White
, currently the fastest computer in the world. ASCI White
was built for the U.S. Department of Energy at a cost of $110 million, and is
powered by 8,192 IBM Power3 microprocessors, each capable of 12.3 trillion
calculations per second. Installed at the Lawrence Livermore National Laboratory
in California, the computer will be used to model nuclear explosions and monitor
the safety of the United States' nuclear arsenal.

Big Blue used the ASCI White open house as a chance to talk about its
non-classified computer business, which includes the world's fastest
civilian computer. That hardware will be used to refine internal
combustion engines and help find ways to solve California's energy crisis. A
company spokesperson said that more than 70 percent of IBM's supercomputers are
used by businesses.

In southern California, Linux is quickly becoming a standard tool in many
special effects shops, making movie magic for animated hit Shrek and late '90s
blockbuster Titanic. Some shops, including Toy Story creator Pixar and
effects powerhouse Industrial Light and Magic, are considering shifting their
entire digital effects operations over to Linux. And of course, IBM wants to be
there to help them.

The company believes that it has the tools and services movie companies need to
make the most out of Linux. IBM entertainment v.p. Steve Canepa told Reuters that he expects his segment of the market to move "en masse"
to Linux. Not without a fight, however: Expect digital effects mainstay SGI to
vigorously defend its turf, offering its own combination of hardware running
Linux.

$85 million for Apple stores
Apple Computer's latest Form 10-Q filed with the SEC indicates that the
company has settled into the brick-and-mortar business for the long haul. In
addition to the stores planned to open later this year, the company will spend
at least $85 million
during 2002 to open even more retail outlets, and will
spend approximately $203 million over the next five to 12 years on lease
payments for those stores. Apple believes its retail division will break even in
the first quarter of 2002, and might even generate a small profit at the end of
the year.

Who's suing who
Legal actions commenced or announced this week:

Schiffrin & Barroway, LLP
announced
that it had recently filed a lawsuit against Caldera Systems; so
did Stull, Stull &
Brody
.

Date Nasdaq DJIA
Fri - 8/10 1956.47 10416.25
Mon - 8/13 1982.25 10415.91
Tue - 8/14 1964.53 10412.17
Wed - 8/15 1918.89 10345.95
Thu - 8/16 1930.32 10392.52
Fri - 8/17 1867.01 10240.78
Company Name Symbol 8/17 Close 8/10 Close
Apple AAPL 18.07 19.02
Borland Software Int'l BORL 11.98 12.97
Caldera International CALD 0.67 0.73
EBIZ Enterprises EBIZ.OB 0.14 0.12
Hewlett Packard HWP 24.05 25.10
IBM IBM 104.59 104.95
MandrakeSoft 4477.PA e6.19 e6.30
Merlin Software Tech. MLSW.OB 0.16 0.18
Red Hat RHAT 3.86 3.81
Sun Microsystems SUNW 14.03 16.22
TiVo TIVO 6.33 6.90
VA Linux Systems LNUX 1.83 2.00
Wind River Systems WIND 15.10 14.95

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