TO REFRESH YOUR MINDS ABOUT LNUX>>>>>>>
VA Linux Systems is IPO all-star
By Tom Davey
Redherring.com
December 10, 1999
If the first-day stock performance of VA Linux Systems (Nasdaq: LNUX) is any indicator, the end of the millennium signals the end of the world as we know it.
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VA Linux Systems began trading Thursday on Nasdaq at more than ten times its IPO price, making it the highest first-day bump in history. Moreover, the company represents a PC hardware stock, a category that's been the whipping boy of technology issues.
VA's machines are designed to take advantage of the wildly popular Linux operating system. With its focus on workstations and Web servers, VA has turned the hardware world on its head. For example, after its first day of trading, VA has a stock market value of almost $10 billion, or five times that of slumping SGI (NYSE: SGI), which ironically has a technology-sharing relationship with VA. For its fiscal year ending June 30, SGI had $2.7 billion revenue, or 153 times VA's $17.7 million revenue. SGI has had some major setbacks over the last three years but still is considered among the most cutting-edge vendors of graphic workstations.
Is VA Linux Systems the Red Hat of hardware?
Red Hat kicked off the Linux phenomenon with its IPO.
Linux poses a subtle threat to Microsoft.
By pricing its 4.4 million shares at $30 a share, VA raised $132 million for an 11 percent stake to the public. The stock opened at $299, climbed to $320, and settled back to close at $250, for a 762 percent gain.
BILLIONAIRE STATUS
On Thursday, CEO Larry Augustin became a billionaire. His 6.6 million shares closed the day with a market value of $1.6 billion. Mr. Augustin developed his Linux-tailored hardware a few years ago for personal use while he was a student at Stanford University.
Linux Magazine publisher Adam Goodman explains that while other PC vendors such as Dell (Nasdaq: DELL) are tweaking their computers for Linux, VA goes further in with its efforts and has a lead in clustering many machines together for large workloads. "I knew this IPO was going to be really big," he says. "But I didn't know it would be the biggest IPO of all time."
The stunning demand for the stock "represents a big shift in software development with open source code," says Cliff Miller, CEO of software vendor Turbolinux. Open source code lets programmers develop applications without first obtaining permission from an operating system vendor like Microsoft (Nasdaq: MSFT).
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