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Technology Stocks : Santa Cruz Operation (SCOC) Going Up? -- Ignore unavailable to you. Want to Upgrade?

To: cmg who wrote (575)	2/16/2000 8:42:00 AM
From: JDN	Respond to of 656

To all: What effect, if any, does anyone think that the rollout of W2K from MSFT have on SCOC? JDN

To: cmg who wrote (575)	2/17/2000 1:06:00 AM
From: simonsez10	Respond to of 656

Just FYI, I probably shouldn't be posting this, but this is Harmons' full comments for his 10 for 2000. This is the report for February specifically about SCOC. I was starting to have doubts about it since its slowly dropping and those July 20s are dropping like a rock along with it, but after reading this again, I'm holding the course. "Specifically, it's important for you to understand what I saw in one of the companies and why it's on the list: Santa Cruz Operation (SCOC). I believe the Internet may be at a critical juncture in the hybrid world of networking operating systems, UNIX, Linux, mainframes, PCs. Open source environments led Linux to fantastic growth. The original open source network operating system -- UNIX -- alone is a complicated sector but fortunately one which is mature. Santa Cruz Operation is one of the few that has taken UNIX to a successful business, as evidenced by the nice growth in revenue and earnings. If that were the only story then it wouldn't be on my list. And 4th quarter results would have it booted from the list entirely, if I was looking at 4th quarter alone for my analysis which I'm not. Behind that initial attraction to any company is talent, people. The personnel to grow with. Consider the scarcity of programmers in the network OS space. People that understand open networking are a rare breed. Very valuable. Ask Bill Gates, Eric Schmidt, Scott McNealy, Lou Gerstner. Part of the allure of SCOC was and is the ability for it to grow into ALL open networking products and services, more of a bundled master licenser of open networking services. That's the play here. Red Hat (RHAT) packages this into a Linux product, basically freeware with a service to monetize the product. Just Linux. And the market cap is way out of hand. Santa Cruz moves into packaging the different computer networking environments with its Tarantella product/service. And UNIX has applications that can run on it, rather than the scarcity of apps for Linux. SCOC also just announced a deal with TurboLinux and Caldera's Open Linux. So in the 5 short weeks since being added to my list it's already moving into Linux. With its installed base of UNIX clients that may want the Linux layer on top of UNIX. Santa Cruz already has the customer, this is an upsell if they do it right. The ultimate reason why Santa Cruz is on my list is that Red Hat ought to acquire them. Red Hat needs to diversify its networking OS offerings and revenue streams in order to grow. Linux is great but Red Hat doesn't own Linux nor has more of an edge than packaging one product. Red Hat's valuation gives it a strong stock to acquire and roll up the networking OS sector for software, leverage the talent into a very powerful team to take on Microsoft NT, Novell, and others. SCOC is on my list as what I think could be the perfect target for Red Hat to acquire. Santa Cruz' moves into other open networking areas confirm that Red Hat and Santa Cruz could be natural combinations. The most important thing any technology company has is its experienced people. Human capital. SCOC has lots while Red Hat has few. That's why Red Hat should buy SCOC. The talented people are what are needed to own network OS, not the brands Red Hat or Santa Cruz." Simon Roffe