August 3, 2001

Open Source stock report: Please welcome 4477.PA

Author: JT Smith

- By Dan Berkes-
MandrakeSoft completes its first day of public trading, Borland goes 15 rounds
with WebGain, and TiVo clarifies its private placement plans. In broader news,
the markets closed down (but up) on the latest unemployment numbers from the U.S.
Department of Labor, and Palm plans to double its pleasure.The Nasdaq market ended Friday at 2,066.33, down 21.05 from
Thursday but up from 2,029.07 at the close of business last week. The Dow Jones
Industrial Average slipped by 38.40 Friday, closing at 10,512.78, up from
10,416.67 at last Friday's bell.

Many of the stocks in our handy little table at the end of this week's
column made improvements over last week, but all were down from their mid-week
highs. Friday's downturn came as the U.S. government ran the latest unemployment
numbers, causing investors to doubt just how quickly economic recovery will

According to the Department of Labor, employers cut 42,000 non-farm jobs during July.
That's a significant number, but one that's quite a bit smaller than the 93,000 lost jobs
reported in June. However, the United States' unemployment rate continues at
levels not seen since 1998, a statistic which, of course, did very little to convince the
herd that stability would be found any time soon.

MandrakeSoft goes public
Paris Linux company MandrakeSoft
(4477.PA) concluded its first day of public trading on the
Euronext Marche Libre on Friday. During its initial public offering, MandrakeSoft
sold more than 688,000 shares to raise $3.76 million, representing just slightly more
than 20% of the company's capital. On the first day of its public
trading, MandrakeSoft closed at 6.19 Euros, or USD $5.47.

Big Blue, the utility
Most people don't own power generating plants, but purchase
their power from a remote plant operated by someone else. IBM thinks that
computing should be the same way, and is spending $4
billion to build 50 server farms
that will allow users to buy only the
computing power they need from a global computer grid, instead of buying and
maintaining expensive computer systems. IBM has chosen Irving Wladawsky-Berger,
current head of its Linux and eLiza efforts, to lead the company's new Grid
Computing Initiative.

In other Big Blue news, there's word that IBM will
new wireless-capable notebooks featuring Intel's Pentium III-M
(the processor formerly known as Tualatin). The ThinkPad T23 will be the
company's first commercially available portable computer with integrated
wireless capabilities. ZDNet's reporter speculates that IBM is trying to play
catch-up with Apple Computer, who has offered wireless-capable notebooks since

Borland fires back
The tit-for-tat exchanges between Borland Software International and WebGain
continue. WebGain recently filed for a declarative judgment asking a U.S.
federal court to rule that its Visual Cafe and StructureBuilder
development products do not infringe upon Borland patents; Borland responded by
filing a lawsuit against
WebGain for violating those patents. WebGain
with a press release to say that Borland's claims are without
merit, and on Thursday, Borland responded to what it
called a "somewhat bewildering press release," disputing WebGain's claims.

Sparcs fly from Sun
Sun Microsystems on Wednesday announced the latest version of its UltraSparc III
microprocessor. Designed by Sun and produced at Texas Instruments, the new
processor runs at 900MHz and uses copper instead of aluminum to boost chip
performance and slash manufacturing costs. Sun plans to roll out the chips in
workstations this November, and in servers during early 2002. This Ultrasparc is
the latest 64-bit chip from Sun, and most analysts predict that its release will
minimize adoption of Intel's competing Itanium processor. Not that Sun should
sleep easy: Those same analysts expect Intel's next-generation 64-bit McKinley
processor to radically change the server market when released next year.

Dell dumps desktop Linux
Citing a lack of customer demand, a Dell spokesman confirmed that the computer
maker has decided to stop installing Red
Hat Linux
on desktop and notebook computers. The company hasn't abandoned
Linux; it still offers workstations and server models with Red Hat, and will
likely continue to offer the distribution to its larger customers who can afford
custom factory configured desktop PCs. The move is merely regional. Other Dell
divisions, including Dell Australia, have announced that they have no intentions
to stop offering Linux on consumer desktops.

Red Hat unplugged
Red Hat Linux on Monday announced that it would work with Britain's 3G Lab to
develop an Open Source operating system optimized for mobile phones and other
wireless communication devices. The companies believe that the Open Source
approach to a mobile OS will win over manufacturers because they will be allowed
to modify the software without having to seek approval from its author.
Presently, the mobile OS market is dominated by Microsoft and Psion's Symbian,
who have the support of all major handheld makers.

Note that the Reuters
report incorrectly identifies Linux as the Open Source operating system to be
modified. LinuxDevices points
that the new OS will actually be based on Red Hat's embedded
Configurable operating system, a.k.a. eCos.

This paragraph does not exist
In a separate announcement, Red Hat this week denied that it had released a beta
version of its Linux distribution, code-named Roswell. Company executives were to comment on the release, but mysteriously vanished in a cloud of
swamp gas just minutes before they were scheduled to take the stage.

HP chills out
Packard announced
late last week that it would make a set of mobile computing
technologies available, aiming to encourage developers to flock to HP's
vision of pervasive computing. The technologies are called Cooltown, and
highlight an HP protocol called eSquirt for communications between devices.

TiVo clarifies placement plans
TiVo this week clarified the stakes of its plans to raise between $50 million and $75
million in a private placement with accredited investors. In a statement released
, the company said the placement would consist of notes and warrants
convertible at any time before maturity, at a premium of 15% to 20% above the
closing price of TiVo's common stock on the day the placement is priced.

Palm double feature
One constant in the short life of handheld maker Palm Inc. has been change,
lots of change. The company started out as a unit of modem maker US Robotics,
then was swallowed by 3COM, and later was spit out by that company to fend for itself.
Now, Palm is planning
to split its business in two
, creating a new company focusing on handheld
hardware and another company concentrating on development and licensing of the Palm
OS. Carl Yankowsky, CEO of Palm's present-day form, believes the split will give
the Palm OS a competitive edge in a market it currently leads, but may soon lose
to rival Compaq's handheld offerings.

Heading for a safe harbor in a rough market
This week's recommended reading comes in the form of a
bracing splash of reality from O'Reilly's David Spector
: "Anyone who has
spent a long time in the computer business knows that the only thing constant is
radical change. There has never been 'stability' -- things are always 'feast,
feast, feast' or "famine, famine, famine.'" It's up to you to ensure that you
remain employed, and Spector presents a few ideas on job retention for the Linux

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

Company Name Symbol 8/2 Close 7/27 Close
Apple AAPL 19.50 18.96
Borland Software Int'l BORL 12.49 13.86
Caldera International CALD 0.75 0.80
EBIZ Enterprises EBIZ.OB 0.14 0.25
Hewlett-Packard HWP 25.29 24.36
IBM IBM 108.18 104.70
MandrakeSoft 4477.PA e6.19 N/A
Merlin Software Tech. MLSW.OB 0.195 0.25
Red Hat RHAT 4.04 4.01
Sun Microsystems SUNW 17.72 16.29
TiVo TIVO 7.00 7.03
VA Linux Systems LNUX 2.20 1.80
Wind River Systems WIND 15.72 14.62


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