Software firms soar on Linux fever

Two software companies with fledgling initiatives for the open-source operating system see their shares soar today for a second day in a row, despite little in the way of shipping products.

3 min read
The Linux operating system is already a hit with software developers. Now its popularity is spreading to investors.

Two software companies with fledgling initiatives for the open-source operating system saw their shares soar today for a second day in a row, despite little in the way of shipping products.

Desktop software maker Corel and Java software maker Applix are both riding a Linux wave washing over Wall Street in the past few days.

Ottawa, Canada-based Corel's shares reached an early morning peak of 10.25 in heavy trading before backing off to 9.15 on the Toronto Stock Exchange, ending with a gain of 85 Canadian cents, or nearly 11 percent, Reuters reported. On the Nasdaq, the issue gained .56 to 6.18. The company promises a Linux-based desktop package by the end of the year.

Westboro, Massachusetts-based Applix was the most active issue on the Nasdaq stock market in morning trading, gaining 4.50, or 27 percent, to 21 on volume of more than 5.6 million shares. The stock gained 6.50 on Friday to close at 16.50.

Linux is a variation of Unix that's expanding in use on servers, desktop computers, and even handheld devices. Linux is popular among technology buffs, many of whom believe it could eventually unseat Windows as the dominant OS.

Despite the heated market activity, Dan Kusnetzky, an International Data Corporation analyst, thinks Wall Street might be acting a bit hastily. "The excitement is premature," because real-world business applications have been slow in coming. A lot of the excitement is based on perception. "But in the software business perception tends to become reality."

The rising interest in Applix from investors hoping that the company will emerge as a new star in the growing Linux universe. One of the brightest stars in that universe is Red Hat Software, which is up 450 percent from its August 11 stock market debut.

Red Hat sells a commercial version of Linux, which in 1998 was the fastest-selling operating system for servers--computers that run computer networks. Microsoft executives said in an internal memo late last year that Linux is a significant revenue threat to its Windows NT operating system.

While Linux is available for free on the Internet, Red Hat is able to sell the program in part by adding technical support and making the software easier to install on computers.

Applix joined the Linux bandwagon last November when it announced Applix TM 1 OLAP (online analytical processing) for Linux, an OLAP package for financial decision support and analysis on the open source operating system platform that is gaining more momentum and acceptability in the marketplace.

In July, the company launched SmartBreak.com, a technical support Web site for Linux developers.

Corel plans to begin a beta test of an easy-to-use version of Linux next month. The company lets people download a basic version of its word processing software, WordPerfect for Linux, for free, and is planning to release most other software for Linux as well.

Earlier in the year, Corel assembled a Linux advisory council, whose purpose is to deal with the growing pains of Linux as well as attempt to "provide a unified commercial voice in association with open-source partners," Corel said in a statement.

Kusnetzky said announcements and continued support by Corel, Red Hat, and other software makers will keep interest in Linux alive and continue excitement on Wall Street.

The excitement for anything Linux continues tomorrow, when Sun Microsystems is expected to announce its purchase of Star Division, which makes two types of its StarOffice software, one type that runs on Linux, Solaris, Windows, and OS/2, and the other, a thin-client version of the software that runs on Java-enabled devices. The purchase price for Star is unknown at present.