My hunch....LNUX has bottomed out and will rebound with new IPO's shortly............Despite the mix in results, analysts say Linux still
resonates with investors.
With the growth of e-commerce, the popularity of the
upstart OS is expected to grow as Web site owners load
up on more hardware and networking equipment. Linux
offers a way to cut costs.
"Two of the four deals in the sector have crapped out. But there's still a lot of hype in the
(market)," said Jeff Hirschkorn, senior analyst with IPO.com. "This sector is rapidly
evolving, and usually you see good results in these circumstances."
Because the software can be obtained for free, Linux companies are seeking out ancillary
ways to make money. Red Hat plans to concentrate on services. While VA Linux has
plans to move into services as well, it specializes in server computer sales and expects
services will be only a tenth of its revenue by the end of 2001. When the "Linux" angle is
scraped away, VA Linux is largely a computer maker competing against giants like IBM
and Dell in a market where profit margins are slim.
Which strategy works best for the long haul depends on perspective. Red Hat has climbed
nearly threefold since its IPO. The company closed at $26.03 on its first
day of trading, adjusting for a 2-for-1 split. Yesterday it finished down
$4.81, or about 7 percent, at $63.56. It was down about 2 percent in
midday trading today.
Meanwhile, Cobalt Networks is down only slightly from its first-day close of $128.13.
Cobalt yesterday ended the day at $100.50, down $3.75, or about 3.6 percent. The
company's performance may be linked to the appeal of server appliances, special-purpose
computers tailored to do a specific job faster and cheaper. Server appliance companies
such as Network Appliance have generally had rising stock prices.
The question now is what happens with Linux-related companies such as Caldera
Systems and Linuxcare, both of which are preparing for their public debut. Others like
Lineo, CyberNet Systems, TurboLinux and SuSE are expected to file their IPO plans in the
near future.
"These four deals all priced their IPOs above their range, so I don't think VA or
Andover will effect future deals," Hirschkorn said. "What is key to the sector's future
IPO performance is the market's overall tone."
ALSO.......CBS marketwatch reports on ICGE.......Although the so-called B2B e-commerce market is more than three times
the size of the online retail market, the combined market cap of
business-to-business companies is just one-tenth that of the better-known
online shopping sites, according to Eric Upin, an analyst at Robertson
Stephens. His top pick: Internet Capital Group (ICGE: news, msgs),
which alone has a market cap of about $29 billion, having risen 4 3/4 to
110 1/2 Wednesday. Business-to-business exchanges allow companies to
buy and sell goods over the Internet, a process that is typically cheaper
and less time-consuming than traditional purchasing. Upin added that he
expects to see 50 business-to-business exchange sites start operations this
year. |
