" writeme += "

" writeme += "" writeme += "" writeme += "" writeme += "

" playme.document.write(writeme); playme.document.close(); if((navigator.appName == "Netscape") && (navigator.appVersion.substring(0,1) >= "3")) {playme.focus();} if((navigator.appName == "Microsoft Internet Explorer") && (navigator.appVersion.substring(0,1) >= "4")) {playme.focus();} if (playme.opener == null) { playme.opener = self; } } function play(vid,neth,netl,realh,reall) { var cm=GetCookie("playbar"); if (cm != null) { //if (cm=="nh" && neth=="t") { cm="hi.asx"; //if(aol||nstr||iebug) { //} else { // showvid('asf',vid+cm); //} } else { if (cm=="nh" && neth!="t") { this.sec=1; pbw(vid,neth,netl,realh,reall); } } if (cm=="nl" && netl=="t") { cm="lo.asx"; //if(aol||nstr||iebug) { //} else { // showvid('asf',vid+cm); //} } else { if (cm=="nl" && netl!="t") { this.sec=1; pbw(vid,neth,netl,realh,reall); } } if (cm=="rh" && realh=="t") { cm="hi.rmm"; if(aol||iebug) { } else { showvid('rm',vid+cm); } } else { if (cm=="rh" && realh!="t") { this.sec=2; pbw(vid,neth,netl,realh,reall); } } if (cm=="rl" && reall=="t") { cm="lo.rmm"; if(aol||iebug) { } else { showvid('rm',vid+cm); } } else { if (cm=="rl" && reall!="t") { this.sec=2; pbw(vid,neth,netl,realh,reall); } } } window.onerror = MSIE; // -->

logo
Tue, May 30, 2000
Click here for Fox News.
real time quotes your portfolio registration help
biz bulletin
  Corporate
Financial
Healthcare
Technology
stocks
  Quotes
Top Performers
Screening
Interactive
Charting
funds
  Quotes
Top Perfomers
Screening
insider
  Stock of the Day
Tip of the Day
Periscope
Launch Live Ticker
Fox News Home

Indices Chart
Click on index
for more information

How Long Can the Linux Bandwagon Last?

By David Armstrong   Fox Market Wire
On January 10, the same day Caldera settled its lawsuit against Microsoft, the small Orem, Utah-based software company filed for an initial public offering that could net it over a half billion dollars.

While the terms of the settlement were not made public, the analogy played out in the press was that David came out of the desert and slew Goliath. Caldera, which markets a Linux-based operating system, had charged that Microsoft's dominance of the market was anti-competitive. Some reports estimate that Microsoft, while not admitting guilt, coughed up $155 million in the settlement.

But more importantly, the proceedings could be seen as further evidence that the Redmond, Wash., giant has something to fear from companies peddling Linux systems and services. Linux, based on a free, "open source" software code that can be downloaded from the Internet, is rapidly being seen as the only viable alternative to Microsoft's operating systems. Some estimates say that a third of all servers are using a Linux operating system.

And investors are taking note, pushing through the roof the value of Linux companies already trading on the market. Red Hat debuted on Wall Street at $14 a share. As of Jan. 10, the stock was trading at $282.50, after a stock split. VA Linux went to Wall Street with an offering of $30 a share. At the close of trading Jan. 10, the price rested comfortable at $165.25 a share.

Caldera, as well as several other Linux companies, hope to equal that success. Caldera markets an e-commerce system called OpenLinux, and offers consulting, training and support to its customers. Some 75 percent of its sales come from large distributors like Ingram Micro, Navarre and Tech Data.

The company hopes to raise $57.5 million in its public offering, though the date of the pricing and the number of shares available have not yet been released. Not surprisingly, the company has yet to make money. It reported almost a $10 million loss in 1998, on only a little over $3 million in revenue.

Linuxcare, Inc., is another company hoping to cash in on investor enthusiasm for all-things-Linux. The San Francisco-based company, which filed to go public on Wednesday, hopes to raise some $92 million on Wall Street in a deal backed by Credit Suisse First Boston.

While companies like Caldera and Red Hat are marketing their own versions of Linux operating systems, Linuxcare, Inc., is gambling that the future of the industry is not in selling boxed versions of the software. After all, the source code is free to whoever wants it. Rather, the future will be in helping those who must learn how it works.

"They are a service-centric Linux company, and for the open-source movement, that's where the business is," said Ted Schlein, a general partner with venture capital firm Kleiner Perkins Caufield & Byers, which has a 22 percent stake in the company. "If Linux is going to be accepted by the Fortune 1000, there is going to be a need for premier services and support to exist."

The company already has forged partnerships with Dell Computer, Hewlett-Packard, IBM Global Services, Motorola, NEC Software, Oracle, Sun Microsystems and TurboLinux.

But not all is rosy in the open source community. A little-known company called LinuxOne Inc., raised suspicions when it filed with regulators to offer up to $25 million in common shares a mere 10 months after it was founded. The stock is expected to debut on Wall Street later this month.

The filing has drawn a lot of criticism from Linux insiders who have slammed the company on community bulletin boards and Web sites. Several observers said it confirms fears that in an overheated market, anyone can write up a prospectus with the word "Linux" in the title, then sit back and watch salivating investors throw money to scoop up shares.

"Usually the leader of the pack goes public and does quite well," said John Fitzgibbon, an IPO analyst at Redherring.com. "Then you have the 'me toos' and the 'wannabes.' This is the normal evolution in the IPO market."

Critics charge that the proposal and business plan in LinuxOne's prospectus was practically cut and pasted from the one filed by Red Hat last year. The company has no revenues and only 10 employees, and as far as members of the closely-knit Linux community can tell, almost no technical know-how in the ranks.

"It is clear to me that the founders of this company are trying to make a fast buck by riding the Linux bandwagon," wrote Ronny Ko, the editor-in-chief of 32bitsOnline Magazine in a column posted on Linux.com, a Linux community Web site.

While the company is in its quiet period prior to pricing, its lawyer has denied that the company is a fly-by-night operation looking to make a quick buck. He said LinuxOne's decision to go public so early was a strategic business decision by the corporate team.

More Marketwire More MarketWire News Top of Page


© 2000, News Digital Media, Inc. d/b/a Fox News Online
All rights reserved. Fox News is a registered trademark of 20th Century Fox Film Corp.
Data from Thomson Financial Interactive is subject to the following Privacy Statement