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If You Were Wondering When Wall St. Would Get It . . .and Novell, Not a Bit Scared

Friday, March 19 2004 @ 02:51 AM EST

Melanie Hollands in IT Manager's Journal has a devastating column, "SCOX: High valuations are a PIPE dream." She says she'd be more encouraged if SCO "would refocus on software sales, rather than its focus on litigation as a potential source of income".

Well, wouldn't we all?

She doesn't mention any names, but I expect we can all fill in the gap and figure out who the analyst is she is referring to here:

"One sell-side analyst has a 'buy' recommendation on the stock and recently wrote 'Our belief is that the stock has now baked in most of the negative sentiment, and this is an excellent time for contrarian investors to look at this stock. With the share price of $11.60 the company has cash/share of $4.70 and no meaningful debt.' Since then, the stock fell 24% from the $11.60 level to the Tuesday close of $8.80. This same analyst has a $45 long-term price target on SCOX. In my opinion, such an optimistic long-term price target for SCOX seems, at best, to be a PIPE dream."

I hesitate to even write about this, because every time their stock goes down, they escalate the circus, and we all have to read again about how they are attacked by unknown persons they believe are in the Linux community, whatever that is.

I am not the only one who read their 10Q and listened to their teleconference and was left with a Huh? There is, however, no missing Ms. Hollands' meaning here:

"There are so many accounting 'treatments' and 'adjustments' that the company is making in relation to its PIPE deal and other matters (write-downs, one-time charges, amortization of intangibles, marking-to-market the convertible preferred) that it makes the 'utility' of an EPS number pretty blurry. However, for those that are sticklers for detail the company reported an EPS loss of $0.16. However, the various 'benefits' of accounting 'treatments' served to diminish the loss reported by SCO Group. Excluding these 'benefits,' the company reported a larger EPS loss of $0.34. Bottom line: in my opinion, this is really just shuffling deck chairs on a sinking ship."

Novell Doesn't Sound a Bit Scared of SCO

Meanwhile, Novell has announced their new SuSE Linux, with the 2.6 kernel, and the consumer version comes with support:

"The new SUSE 9.1 Linux, set to go on sale at retail stores in early May, will come in two versions -- a $29.95 personal edition and a $79.95 professional edition for corporate users. By comparison, the full version of Microsoft's Windows costs $199.95 for the home edition and $100 more for the professional version. In addition SUSE Linux is less expensive than Lindows, a different version of Linux that retails for $49.95. . . .
"The new Novell Linux will add support for Intel Corp.'s Itanium chips. These are 64-bit processors that can handle more demanding tasks than the 32-bit Pentium chips found in most desktop computers. It will also allow users to boot up the operating system directly from the CD-ROM disk, without having to install it to the computer's hard drive. This will enable first-time users to experiment with Linux without having to wipe out data already stored on the computer."

Line56 has a few more details:

"Suse 9.1 contains the 2.6 kernel of Linux, which has incremental benefits over the 2.4 kernel. 'There's better hardware support, better threading capabilities, and improved performance of applications,' claims Eckert.
"That's good news for small businesses that want to get into desktop Linux, which can be a cheaper alternative than rival operating systems, but what about the specter of SCO? Eckert says that Novell, itself in a battle with SCO, has an indemnity plan on the server side, and that 'there's no noise about the desktop,' so prospects shouldn't feel intimidated."

InfoWorld has a bit more:

"In tandem with the Professional Edition Novell also announced SuSE Linux 9.1 Personal Edition, which comes with a version of Linux that can be booted and used from the CD drive, called LiveCD. This enables users to try out the product without having to install it on their machines.
"'LIVE CD doesn't require any modifications to your hard drive to run a full desktop version of Linux. It will actually mount your existing hard drive so you can get at all of your documents. If you decide you like it, you just pop that CD out and pop in CD number 2 and install it,' said Ungashick.
"As with the Professional Edition, Personal Edition users can chose to have the product automatically set up a partition on the hard drive that allows them to boot Windows as well as Linux. Both versions also include the latest Gnome and KDE desktops.
"Gnome 2.4.2 improvements focus on usability and overall user comfort, according to company officials. But also contains new features including CD burning capabilities, the Gaim universal instant messaging client, and simplified printing configuration. New applications included are Gnome Meeting video conferencing system and Evolution, a groupware suite that has SSL connectivity for security.
"KDE 3.2.1 includes a new personal information manger called Kontact, which offers a consistent interface for e-mail, calendar, address book and notes applications. The new version also sports an instant messenger called Kopete, which makes is possible to make fast contacts through MSN AIM, ICQ and IRC, Yahoo Messenger and Jabber.
"The company has also improved the abilities of the file manager as well as the Web browser Konqueror. Users can now import Internet Explorer bookmarks, and can more quickly browse through image directories, network folders and network services, accompany officials said."

I am so going to buy this distro. I don't care what is in it. People ask me sometimes if a boycott of SCO customers would be appropriate. I never have given my support to anything like that. For one thing, they may be contractually stuck. Anyway, it's not nice. But to positively support companies that try to go to bat for GNU/Linux, that I am comfortable doing. Novell stood up when it counted. Others who maybe could have so far have not. David Berlind writes that it looks like SCO did buy the Brooklyn Bridge, because of an agreement between USL and Sun:

"It could also turn out that a 1994 agreement between Sun and USL (very shortly after USL was acquired by Novell) holds more evidence of the same sort of IP dilution. It's just a hypothesis as this point, but it could turn out to be a powerful 'smoking gun' that influences the outcome of the various suits brought by SCO. . . .
"What hasn't been discussed is whether another "sealed" document that could be equally damaging to SCO's case might exist. For example, a document that, on the basis of other contributions made to AT&T's Unix System V, gives the contributor(s) rights to the Unix IPR that are equivalent to or perhaps even more expansive than the hall pass that UC Berkeley acquired in its settlement with Novell. If such rights were awarded to yet another contributor besides UC Berkeley, then those rights could end up shattering SCO's claims.
"I'm almost certain that such a contributor exists--Sun Microsystems. Although the company won't officially confirm or deny my theory, I came across some old notes in which Jonathan Schwartz, Sun's executive vice president for software, discussed the 'extremely expansive' rights to Unix that the company acquired 10 years earlier, in 1994.
"Sun has declined to comment on just how expansive those rights are, but the negotiations for that license were impeccably timed with the most gut-wrenching phases of the litigation over Unix, as well as the acquisition of USL by Novell."

Sun can decline to comment to a journalist, but not to an IBM or Red Hat or Novell attorney in discovery.

Because they have stood up for GNU/Linux, my money will go to Novell and Red Hat and IBM. If I think of a way, I'll try to buy from AutoZone and Daimler Chrysler too. I would like Novell to please do one thing, though. I think they should credit Knoppix's creator, Klaus Knopper, for the LiveCD idea. They can benefit from the idea that he revolutionized and imitate the CD he gave to the world under the GPL, but they should, in my opinion, give him credit for such a breakthrough. And it's worth pointing out that a lone coder did it, all by himself, with no corporate funding. Just an idea and some amazing synapses. If you click on the link, you can read his message about patents. Update: I love Groklaw's brainiac readers. Even when I make a mistake, it turns out fruitful. If you want to know the true pre-Knoppix history, just take an enjoyable stroll through the comments today on this story. It seems, as always, great ideas build on previous knowledge, and Knoppix was not the first, although it was the first to achieve the compression that made it such a success. Its forebears go back to the mid-90s at least, I am informed. So, I am all wet on this one, but the combined expertise of Groklaw makes up for my lack in a most enjoyable way.

Meanwhile, here's a Point/Counterpoint for you: the future, from a student at Wilcox High School, who believes that sharing knowledge leads to innovation and progress, which is what the GPL is for, by the way. And this counterview, the icky present "Who Says Standards Are Sacred?", in which the author actually defends Rambus.

Now I've seen everything. Say, he isn't maybe softening us up for a Microsoft play in the future, is he? More on Microsoft and its sordid past and its troubled present, as revealed in the antitrust case in Minnesota, soon.

P.S. I've been getting requests for a Novell timeline. Thanks to Henrik, we have one now. Thank you, Henrik.

If You Were Wondering When Wall St. Would Get It . . .and Novell, Not a Bit Scared | 334 comments | Create New Account

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Mistakes Here Please

Authored by: PJ on Friday, March 19 2004 @ 04:27 AM EST

Please record all my mistakes for posterity here, so I can find them quickly.
Thank you.