June 1, 2001

Open Source stock report: Unemployment numbers save the day

Author: JT Smith

- By Dan Berkes -
The motto for this week's market: It could have been worse. Tech stocks led the Friday rally, but most were down from last week. Also this week, investors found good news in unemployment figures.The short trading week can best be described as "mixed," with both the Dow and Nasdaq closing significantly down from the previous Friday. The week ended better than expected, thanks to a modest market rally on this first day in June, as investors speculating that the latest U.S. unemployment figures could signal an economic turnaround.

The Dow slipped back under 11,000 points for the first time since May 16, closing at 10,990.41. The Dow gained 78 points from Thursday's close, but it was still 15 points lower than last Friday's bell. Nasdaq's index closed at 2,149.44, staging a 38-point gain for the day, but down almost 102 points from the close of business last week.

While tech stocks were the major winner's in Friday's upbeat rally, all but two of the stocks monitored in our handy table at the end of this column dropped in price from last Friday. "No one likes to see their stocks drop in price," said market analyst James Philburn, "but considering where these shares were a day or two ago, it's a vast improvement."

Today's modest rally was in part caused by the latest unemployment report from the U.S. Department of Labor. Numbers edged lower in May, down to 4.4 percent, compared with 4.5 percent in April. Most Wall Street analysts were betting the unemployment roles would rise to 4.6 percent this month.

Today's report was the first time since September that unemployment rates have dropped since September 2000, when unemployment hit a 30-year low at 3.9 percent.

Philburn cautions against these numbers generating excessive enthusiasm, noting that the changes may be more procedural in nature. The government, he noted, revised its April report after changing the way it counted working Americans. The new counting methods revealed that more jobs were actually created than originally reported.

"We're excited about the unemployment numbers," said Philburn, "but I'm still betting that this number is going to bounce between 4.4 and 4.8 for the next year, at the least."

Sun rise, Sun set
A few major announcements from Sun this week, one good, one bad. In the good-news department, Sun announced the presence of SUNSOURCE.net, a "Web portal that centralizes critical information on all of Sun's free and Open Source projects," including Sun-sponsored community and other projects to which Sun contributes. The new site is powered by development hosting service CollabNet.

In less-than-good news: A leaked company memo disclosed that Java v.p. George Paolini, the brains behind the company's Java ONE response to Microsoft's .NET, and overseer of the controversial Java Community Process, will leave the company this week. LinuxGram's report of Paolini's departure notes that one of the signatories on that memo was chief marketing officer John Loiacono, believed to be one of Paolini's rivals within the company.

Paolini will join Zaplet, Inc., as chief marketing officer. Zaplet, an "email development" concern with $90 million in VC funding, is headed by Alan Baratz, who holds the blame by some in the Open Source community for creating Sun's initial Java closed development fiasco.

IBM: Go east, young Tux
The big news in Linux and Open Source software this week was the announcement of an alliance between Fujitsu, Hitachi, IBM, and NEC that will work on Open Source projects in an attempt "to drive Linux further into the enterprise." The partnership plans to work with existing Open Source developers to offer enterprise customers additional Linux features. In the works is a "problem-isolation" project allowing developers to pinpoint problems in running systems.

Caldera goes to Tokyo
In a press release issued Thursday evening, Caldera International announced the opening of its new Japanese subsidiary, Caldera K.K. Plans call for Caldera K.K. to open local offices "providing local Linux and UNIX business solutions to the Japanese enterprise market. The new subsidiary counts Fujitsu and Hitachi among its investors, and Makoto Asoh, formerly of Caldera's Nihon SCO has been named as its director.

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

Company Name Symbol 6/01 Close 5/25 Close
Apple AAPL 20.89 22.76
Borland Software Int'l BORL 10.64 10.06
Caldera International CALD 1.74 1.95
EBIZ Enterprises EBIZ.OB 0.80 0.77
Hewlett Packard HWP 29.25 30.05
IBM IBM 112.89 117.80
Merlin Software Tech. MLSW.OB 0.25 0.28
Red Hat RHAT 5.34 5.95
Sun Microsystems SUNW 16.63 20.47
TiVo TIVO 8.61 11.21
VA Linux Systems LNUX 3.85 4.46
Wind River Systems WIND 22.74 25.03


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