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To read comments to this article, go here
Waiting for SCO
Tuesday, December 21 2004 @ 10:43 AM EST

As you know, SCO has its teleconference later today, at 5 PM Eastern, and I believe it should be fascinating. Their listen-only mode URL is http://ir.sco.com/MediaRegister.cfm?MediaID=14111, but you have to have either RealPlayer or Windows Media Player or a reasonable facsimile. You also have to provide them your email address. We'll let you know what happens, if you don't wish to provide them with your email info, and who could blame you?

The news from the Microsoft-EU antitrust case is that there will be word tomorrow on whether the sanctions against Microsoft will be suspended during an appeal. And get this: Microsoft is asking the EU Commission: "Could we talk?"

"Microsoft renewed its offer Monday to resume negotiations with the European Union in their five-year antitrust battle, saying it would do so immediately after a court rules this week on whether to suspend an order forcing the software giant to change its business practices."

Meanwhile, it keeps stressing, according to the Chicago Sun Times, that the judge will probably rule against them. When PR sounds like that, it doesn't necessarily mean that is what they really think. It could just be spin. If they are victorious, they look even better. If not, they can remind all the reporters that they already told them that only 17% of all cases in the last decade have been suspended during an appeal, and that minimizes the negative impact.

While we wait, you might like to read a few items from Dion Cornett's Open Source Wall Street. Here's what Dion has to say about SCO:

SCOX continues to trade up into year-end

The SCO Group (SCOX: Market perform) reports Q4 and year-end results Tuesday 5pm EST with our and consensus estimates both at $10.8M with a $0.18 loss and $43.6M with a $1.29 loss respectfully. Even though revenue is expected to drop 55% year-over-year, $10.3 million of last year’s Q4 revenue of $24.3 million came from one-time licensing deals. Discounting this one time effect, we expect revenue to be down 23% year-over-year but up 2% sequentially, with a smaller operating loss largely attributable to headcount reductions. Despite the improvements in the core business, we still believe that the Company’s stock price going forward will continue to be driven more by legal events, and, for the next two weeks, portfolio management. Beyond year-end window dressing, we believe that the next catalyst for the shares will be a potential January hearing of IBM’s (IBM: not rated) partial summary judgment motion. Separately, SCOX filed Change in Control Agreements with the SEC last week giving company officials immediate vesting in the event of a take-over or acquisition. We believe that this measure is relatively routine: it does not necessarily denote a pending event.

Yes, it continues to trade, but who is doing the trading? Interestingly, he rates Red Hat as Outperform. ("Red Hat reports earnings on Wednesday at 5pm EST. We expect Q3 revenue and earnings of $52M and $0.06, in line with consensus. We are confident in RHAT’s fundamentals given a seasonal rebound in western Europe, steady overall Linux server growth, deeper penetration amongst a broader group of OEM’s and modest expectations for retail, consulting and embedded revenues.")

And here are two more bits of news you may be interested in:

IBM deepens relationship with Great Wall Computer

After announcing its deal with Lenovo, Great Wall announces a new joint venture with IBM called International Systems Technology (IST) to manufacture and sell IBM’s eServer xSeries and OpenPower servers in the Asian Pacific market. While our expectations for RHAT and NOVL sales in China are modest given the Chinese governments support of Red Flag, the joint venture is likely to help undermine Microsoft’s (MSFT: not rated) Windows’ monopoly in the region and large international Chinese enterprises may still use RHAT or NOVL for global consistency.

Recent studies indicate lower TCO and fewer bugs for Linux

Two (2) separate studies released last week provide support to our belief that the Open Source development model results in superior code. First, Cybersource reported that, given a 2-year TCO, Linux can have up to a 36% cost savings over Windows. Secondly, Stanford University Computer Science Research Center announced last week the completion of a 4-year study that indicated that Linux has .17 bugs per 1000 lines of code for a total of 985 bugs compared to 2030 bugs per 1000 lines for proprietary code, a 100:1 advantage.

Speaking of bugs brings to mind malware. You probably heard that Microsoft has bought an antispyware company, and there were rumors that they'd clean up your computer with the new software, if you crossed their palm with silver.

That's a fine business. Cause a problem and then make people pay you to fix it. I dare say it's recession-proof. Anyway, it seems the new purchase has hit an IP snag:

"Sunbelt Software on Friday confirmed reports that it has exclusive rights over certain aspects of the anti-spyware programs Microsoft gained in its acquisition of Giant Company Software on Thursday.

"The exclusive rights claimed by Sunbelt mean only Sunbelt can legally create and distribute software development tools for Giant's programs. If legitimate, the claim means Microsoft would need permission from Sunbelt before letting software partners build links to Giant's programs, which are designed to combat spyware and spam. Without such links, the software may not work well with programs from third parties."

You have to admit, it made you smile just a little, didn't it? Of course, the lawyers that set up the deal aren't smiling, I'm guessing.


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