September 6, 2001 11:00 AM PDT
Caldera faces losses, delisting, layoffs
In the third quarter ended July 31, Caldera had $18.9 million in revenue. In the fourth quarter, the company expects revenue of $15 million to $20 million and an operating loss of $20 million to $24 million, including restructuring charges, the company said Thursday.
The Orem, Utah, company had expected an operating loss of $14 million to $15 million for the most recent quarter, with revenue between $18 million and $20 million. Analysts surveyed by First Call no longer cover the company to provide independent expectations.
Caldera began as a seller of Linux software but this year also acquired two versions of Unix from the former Santa Cruz Operation. The company--one of several to be hit by the decrease in funds for unprofitable start-ups--faces a dark economy compounded by steep competition from the Linux leader, Red Hat, as well as from companies with more popular versions of Unix such as Sun Microsystems' Solaris and IBM's AIX.
The Unix expansion significantly increased both revenue and expenses, Caldera said in a statement.
Caldera shares were trading at around 45 cents Thursday, a far cry from the company's initial public offering in March 2000, when shares sold for $14 and increased to $29.44 on the first day of trading.
Caldera announced plans to lay off staff and change its organizational structure "in accordance with revenue expectations and worldwide economic conditions," Chief Executive Ransom Love said in a statement Thursday. The company already laid off 32 employees in April.
Love already has cut manager jobs, taking over roles of president and chief operating officer himself, he said. The cuts this quarter will result in an unspecified restructuring charge.
Caldera's board voted unanimously to seek shareholder approval for a 1-for-6 reverse stock split that would put the share price above the $1 mark required for Nasdaq listing. "This action was taken by the board to seek to increase the pool of potential investors in the common stock and to pre-empt any action that might be taken by Nasdaq to delist the common stock," the company said in a regulatory filing Thursday.
Since late July, "the company's stock has traded below the minimum $1 bid price required by Nasdaq," Caldera said. "The low trading price has increased the difficulty of attracting analysts for the common stock and the interest of institutional investors in acquiring shares."
Meanwhile, Ebiz Enterprises, a Linux and Unix company in which Caldera had invested, also is struggling, with its stock trading at 4 cents per share.
The company is in dire straits. "Without additional working capital, the company is not viable as it is currently structured," Ebiz Chief Executive Dave Shaw said in a July letter to shareholders.
Ebiz has been through a variety of strategies to try to capitalize on Linux. It launched its Linux strategy as a seller of cheap workstations in 1999. In May 2000, it merged with retail outlet LinuxMall.com.
In September 2000, Caldera invested $3 million in Ebiz and transferred its PartnerAxis group, which hoped to attract software companies to Linux. But in April, Ebiz sold PartnerAxis to BySynergy, an investment firm in Sedona, Ariz.