Linux shares on sale now...great time to invest in companies like ANDN and LNUX.......Linuxcare gets cash infusion, new executive
By: Stephen Shankland, CNET News.com
12/14/99 4:42:00 PM
Source: News.com
SAN FRANCISCO--Linuxcare may not be among the Linux companies going public, but it seems to have no trouble finding
investment funding or finding new ways to spend it.
The San Francisco company, which sells Linux technical support and consulting services, received a $32.5 million investment
that will be used to pay for a major expansion of the company, chief executive Fernand Sarrat said at a news conference today.
With investment offers totaling $300 million, the company decided to raise the level of investment from its earlier plan of $25
million. "It's kind of hard to say no," he said.
Linuxcare will use the funding for hiring more Linux talent, expanding operations globally,
increasing support for using Linux in gadgets, improving awareness of the company and beefing up
its own computing infrastructure, Sarrat said. Patricof and Company Ventures led the investment,
which also included funding from Sun Microsystems, Dell Computer, Oracle and Motorola.
Linuxcare's competition in providing Linux support and consulting comes from new companies
such as Red Hat and VA Linux Systems as well as more established companies retooling for
Linux such as Santa Cruz Operation and IBM.
The funding was one of many announcements today. Linuxcare acquired three smaller Linux
companies, expanded support services for a raft of new software, and announced a deal to help
Informix customers with the Linux version of the database software.
Linuxcare also got a new chief financial officer, as Sarrat replaced Anthony Pollace with Christian
Paul, the former CFO of Cloudscape, a Java database company owned by Informix. Pollace, who
was hired in September lasted just three months. He'll stay on as a consultant, but "there were a
couple of tick marks I wanted on the CFO" resume, Sarrat said. "The fit between what he wanted
and what I wanted wasn't quite there."
As previously reported, Linuxcare has been focused on the current round of private investments instead of an initial public
offering--a strategy that has raised tens of millions of dollars in the last four months for Linux-related companies Red Hat, VA
Linux Systems, Cobalt Networks and Andover.Net.
Linux is an operating system based on Unix and available for free or very low cost. It's currently popular for use in servers, and
many believe Linux competes both with Microsoft Windows and with various versions of Unix. Linux is popular with investors at
the moment, most notably exemplified by the record IPO from hardware maker VA Linux last week.
But Linuxcare wants to get its business in better shape before it goes public. The company isn't profitable and won't be for the
next year as Linuxcare pays for aggressive hiring and expansion, Sarrat said in an interview. Shunning the method pioneered by
Internet companies, Sarrat is focusing on building up the business before Linuxcare goes public, instead of using the proceeds of
an IPO to fund that expansion.
"When profit comes, it comes. And it will come," Sarrat said. "Next year is a building-the-company year."
Being unprofitable is nothing new to Linux companies. Red Hat had a net loss of $5.2 million in the six months ending Aug. 31.
VA Linux lost $10 million for the quarter ending Oct. 29. Andover.Net lost $5.4 million for the year ending Sept. 30. And Cobalt
lost $13 million in the nine months ended Oct. 31.
But will the investor enthusiasm for Linux that led to those companies' powerful IPOs still be around when Linuxcare is ready for
its own offering? Fundamentally, Sarrat believes the Linux trend has staying power because it costs far less than Windows and
other operating systems and works well to build the infrastructure of the Internet.
Also, Linux has stealthily started taking over within many companies. Linuxcare found that one aerospace company had 10,000
Linux computers on its network but that the top brass weren't aware of the profusion of Linux boxes, Sarrat said. Though Sarrat
declined to say which company Linuxcare examined, sources have said it was airplane manufacturer Boeing.
The company's expansion, from 30 employees in May to 120 now, has been partly fueled by acquisitions of three companies
announced today. Linuxcare acquired the Puffin Group, a consultancy based in Ottawa that was working on translating Linux to
Hewlett-Packard's PA-RISC chips; Prosa, a Linux consulting firm in Padua, Italy, whose customers include Telecom Italia and
the Vatican; and Cheek Consulting of Seattle, which has an extensive Linux information database licensed by ZDnet.
In addition, Linuxcare has hired more new programmers, which can be difficult with many different companies trying to woo Linux
programmers. Among the notable open-source programmers, well known to the Linux community, that Linuxcare has hired in the
last 30 days are Rusty Russell, who has worked on "firewall" software to protect Linux systems from hackers; Stephen Rothwell,
who works on power management for Linux on laptops; Phil Schwan, who has worked on making file storage systems better
suited to computer appliances; and Rasmus Lerdorf, who has written software for the Apache Web server.
Street believes Linux leading revolution in
PCs
Tue, 14 Dec 1999 06:22:34pm
From: Tribune Review
There may be new and highly paid staff positions opening soon at
the New York Stock Exchange and its members firms.
These days, you see, a company's story is worth much more than
the substance of what it does. So, instead of wasting time looking
at things like profits, revenue and market share, the stock
exchange and its member firms would be much better off merely
concocting good stories. Therefore, they need good story writers.
There has been no better yarn in recent memory than the story
behind the Internet. This thriller has everything - money, glamour,
intrigue - that sells.
But these days there is a new best seller on Wall Street called
Linux.
This one has some of the same gripping elements of the Internet
story and more. Linux adds the subplot of an attempt to topple the
evil empire ruling the personal computer world.
Every Windows user at one time or another has faced a dreaded
error message that essentially says that his computer has shut
down. Linux is a recently developed operating system that its
developers claim is more stable than Windows.
By most accounts Linux delivers on much of this promise. In the
current Windows-based world, however, telling PC users Linux is
easier to use than Windows is a tough sell since most people now
are comfortable with the Windows environment.
But the issue is not how good Linux is or is not. The issue is that it
has become Wall Street's latest story - a story that has had much
more to do with valuations of the stocks than any of the reality
underlying the story.
What are the chances Linux will replace Windows? Very low and
maybe nil.
Can a portion of high-level PC users benefit from Linux? Probably
so.
The Linux-Windows fight, however, is a far cry from the
Windows-DOS fight Microsoft won easily years ago. To the
average PC user, Linux probably can only make their computing
life more complicated, not less.
Despite what appears to be the reality that Linux has no chance,
the stocks of companies involved in Linux act like this is the
beginning of a revolution in PCs, resembling what happened 15
years ago. |
