Linux slumps, BT break-up and putting wetnose out of its misery

NEWS This morning's Financial Times reports that VA Linux has issued a profits warning, sending not only its shares, but those of rivals Red Hat and Caldera into free fall. VA Linux is trading at around $19, a long way down from the highs of its stock market debut last December when it hit $320. Chief executive, Larry Augustin, has no doubts where to lay the blame however. He told the FT that while existing customers remain loyal to the open source supplier, "the number of new customer opportunities from venture-funded dot-coms declined faster than anticipated." Another man looking for someone else to blame is BT chairman, Sir Iain Vallance. In his speech to the Confederation of British Industry, quoted in The Times this morning, Vallance argued: "After two decades in which growth in company profits has steadily outpaced the growth in the economy as a whole we are now seeing price pressures coming to bear on margins. In parallel, from the mid-1990s, companies began to take on more and more debt, with median capital gearing reaching a 25-year peak in 1998." Despite these protestations, others are left in no doubt as to the solution to BT's problems: break-up. A representative for one of BT's largest shareholders told the Daily Telegraph that rather than sell minority stakes in its businesses - as the company is currently considering - it should "break the business up and distribute shares in its subsidiaries to the existing shareholders." Finally, today sees the demise of another dot-com. The Times reports it is the turn of wetnose.com, a seller of pet and equestrian products to die the dot-com death. Among its high-profile casualties, wetnose counts Lord Rothermere who the paper says owned a 10 per cent stake in the venture. For those not aware of such things, Rothermere is also chairman of the Daily Mail, and papers being papers The Times seems to enjoy the demise of one of its own.