Facebook Twitter

Settlement fuels Caldera ‘family’
Orem company is ‘settling up’ with spinoffs thriving

SHARE Settlement fuels Caldera ‘family’
Orem company is ‘settling up’ with spinoffs thriving

If you measure a company's size by the number of employees, Orem-based Caldera Inc. is as small as it gets. Bryan Sparks is the president and chief executive officer. He's also the sole employee.

If you measure a company by its heart, though, Caldera Inc. is considerably bigger. That was demonstrated when it filed a lawsuit charging software giant Microsoft with anti-competitive practices until the case was settled a few days ago. The details will be kept secret, but analysts estimate its worth $155 million to $250 million for Caldera.And if you measure a company by its future products, Caldera's no longer a story. The company is in the process of "settling up" and very soon it won't exist, Sparks said.

But it has a legacy that's thriving and has big plans for the future.

Caldera Inc. was founded by Sparks in 1994 as a start-up venture funded by Ray Noorda, former CEO of Novell, which had developed DR-DOS, the program that was at the heart of the lawsuit. Caldera bought the program and sued Microsoft the same day.

DR-DOS was doing quite well when Microsoft introduced its own operating system, MS-DOS. And, according to the lawsuit, Microsoft used anticompetitive practices to sink DR-DOS. Many Windows programs were incompatible with DR-DOS. Others would flash error messages indicating an incompatibility that really didn't exist. A lot of consumers, hooked on Windows, stopped using DR-DOS. Sales plunged.

That doesn't mean it went away. In fact, Sparks said, they've "sold a lot of DR-DOS in the last few years." It's used in embedded operating systems, like those found in cash machines, for example. "We've been cash positive on DOS alone. It's been a very profitable business for us."

In the meantime, two companies spun off from Caldera Inc. In 1998, Lineo, for which Sparks is also the CEO and president, started up under the name Caldera Thin Clients. Later the name was changed to the fanciful "Lineo," which really has no meaning. "One of the challenges of starting a company is can you get a domain name," Sparks said. Lineo was available and it sounded a little like Linux, which is the operating system their products work with.

Lineo develops Linux-based software for embedded devices -- consumer electronics such as Internet phones, digital cameras, cell phones, smart phones with little browsers and more. They're not involved with personal computer technology at all. "The more it looks like a PC, the less interested we are," he said.

The other spinoff is Caldera Systems, which develops Internet-related business programs, including OpenLinux, technical training and support. Earlier this week, Caldera Systems announced that some technology and investment leaders had poured $30 million in private equity financing into it to "fund operations and accelerate the growth and acceptance of Linux."

Caldera Systems has also filed papers with the SEC that, if approved, will allow it to sell its stock publicly.

While the two companies will forever trace their roots to Caldera Inc., neither Caldera Systems nor Lineo had anything to do with the lawsuit and it's not public who will benefit financially from the lawsuit. And they operate independent of each other as well, Sparks said.

Lineo benefits indirectly from the lawsuit only in that its leader/employee is no longer distracted by it, Sparks said. And Lineo will inherit DR-DOS when Caldera fades away.

But Dan Kusnetzky, program director at International Data Corp. who follows Caldera, believes the lawsuit is good for the "Caldera family" in other ways.

"One of the issues Caldera has faced is that other companies in the Linux community have garnered more attention than has the Caldera family of companies. Caldera has many of the same agreements, funding partners and products as a company like Red Hat. But somehow they haven't gotten the attention I think they deserve. I think winning or even being involved in this (Microsoft) case and coming forward as they did with such a strong position, will definitely help Caldera -- all aspects of Caldera."

As for Caldera Systems, Kusnetzky believes that any link with the Caldera of Microsoft lawsuit fame will help. It's just one more in a string of positive announcements -- something any company wants right before the Initial Public Offering. The association "may make some investors look more favorably on a Caldera offering than they might otherwise have."

Meanwhile, Sparks talks of the near future, when imbedded programs -- many created by Lineo, he hopes -- change everyday tasks even more. Today they run thermostats. Tomorrow, they may make it possible for someone to approach a soda vending machine and, lacking a quarter, call the soda machine on the cell phone, order the desired soda, pop it open and have the 50-cent cost placed on the cell phone bill.

"No PC. No server. That's the business we're in, and we think it's very exciting."

He also believes Lineo will be one of the fastest-growing companies in the next two years. It already has more than 50 employees and an office in Taiwan. "We're expanding nicely and we have development centers that will open soon. We're outgrowing our space and hiring more people. In fact," he laughed, "we have people whose sole job is to hire other people."

Deseret News business writer Jenifer Nii contributed to this story.