SCOX vs. RHAT

by Todd Ogasawara

With all the talk about who did what when in the Linux kernel, you might have missed another interesting battle: The battle between SCOX and RHAT share prices.


While looking at various investment options the other night, I took a look at SCO (SCOX) and Red Hat (RHAT) on a whim. I had not looked at either one in a long time. If you are like me, you will probably be surprised by what you find. If you have the time, chart out SCOX and RHAT for the last 12 months in a comparison chart (say one that assumes an initial $10,000 investment).


SCOX is up a healthy 71% for this May 2003 to May 2004 period. However, that is a far cry from the 486% move it saw from May 2003 to November 2003. RHAT is up an even healthier 275% with what looks like a relatively steady growth to my amateur eyes in the same May 2003 to May 2004 period. Note that none of this is investment advice. I'm just noting some interesting numbers here. (Tonight I took a look at Novell (NOVL) and noticed it is up 249% over the same 12 month period. But, like SCOX, it is down somewhat sharply from its peak of 393% a few months ago. And, if anyone is wondering Microsoft (MSFT) is up 1% for the past 52 weeks).


With this knowledge several days old, I was not too surprised when Slashdot pointed to two articles reporting that SCO is laying off 10% of its worldwide workforce (Santa Cruz Sentinel) and that the Royal Bank of Canada has elected to convert 10,000 shares of SCO's Series A-1 Convertible Preferred Stock it currently holds into a total of 740,740 shares of SCO's common stock ... (and) ... Additionally, Royal Bank of Canada informed SCO that it has sold 20,000 shares of Series A-1 stock to BayStar Capital II, L.P. (Yahoo Finance/PRNewswire).

So, what do you think will happen in the next few months?


4 Comments

musnat
2004-05-09 09:33:55
Comparison
You don't compare MSFT with RDHT or Novell or SCOX, you compare it with IBM, HP and so on. Your comparison doesn't make sense, except for Slashdot idiots.
toddogas
2004-05-10 00:43:08
Comparison
Why compare Microsoft directly with HP or IBM?


Microsoft does not manufacture computers as HP and IBM (and Dell for that matter) does. If you look at its industry category (as classified by investment analysts, etc.), Microsoft is classified under Applications Software (like Novell) while Redhat and SCO fall under the somewhat similar category of Internet Software and Services. If you look at firms like HP and IBM, you will find them classified under Diversified Computer Systems (or some similar wording).

jwenting
2004-05-10 04:47:13
Comparison
because you don't compare companies based on what they build as much as on their net worth, financial situation, etc. etc.


Comparing MSFT with RHAT and concluding RHAT is a better investment because their stock is more active is like saying that parachute jumping is safer than driving a car to work every day because less people die doing it (without ever taking into account the differences in the number of people involved).

toddogas
2004-05-10 09:57:59
Comparison
Hmm. Two things:


1. I hope everyone noted on a whim in the second paragraph and...


2. Note that none of this is investment advice. I'm just noting some interesting numbers here. in boldface in the third paragraph.


The intent of my little blog was obviously not clear. Sorry about that folks. So, let me try to make the intent of my notes a clearer here.


If you take a look at a 52 week line chart of hypothetical growth of RHAT vs. SCOX, you will find there is an interesting crossover point where the lines intersect and form an X. Previous to this crossover point, SCOX's growth had fax exceeded RHAT's. From the point of the crossover a few months ago, however, the hypothetical RHAT investment steadily overtook SCOX's. I thought this was an interesting analog to what appears to be the the general investor's (non-techie) view of the SCO vs. Linux (and RHAT as the Linux packages sales leader in the US) kernel debate over the past year.


I hope this helps clarify the intent of the blog for those who seem to think it was some kind of investment advice.