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Technology Stocks : Linuxcare, Inc. (LXCR) -- Ignore unavailable to you. Want to Upgrade?

To: Manfred who wrote (10)	4/7/2000 6:25:00 PM
From: Glenn Petersen	Respond to of 17

LXCR postpones its IPO: news.cnet.com Linuxcare replaces CEO, postpones IPO By Stephen Shankland Staff Writer, CNET News.com April 7, 2000, 2:40 p.m. PT Linuxcare chief executive officer Fernand Sarrat has resigned, and the company has postponed its initial public offering. Pat Lambs, who has been vice president of service delivery for the San Francisco-based provider of Linux technical support and services, will lead a newly created office of the CEO. The moves come amid a gloomy climate on Wall Street, particularly for Linux companies. Red Hat, VA Linux Systems and Andover.Net have been sliding since their heady IPOs in 1999, and Caldera Systems had a lukewarm IPO in March. Venture capital firm Kleiner Perkins Caufield and Byers invested in Linuxcare and brought Sarrat in to provide some seasoned management to the company, which was founded by San Francisco Linuxenthusiasts Art Tyde, Dave Sifry and David LaDuke. Sarrat left his last CEO position at security software firm Cylink because of disagreements with its board. In an earlier interview, Sarrat said he and the board didn't agree about how a revenue recognition issue had been handled. "We are confident that Linuxcare's business plan, management strength, technology infrastructure, employee base and technical expertise will enable us to work through this event and pursue our path toward an initial public offering and a long-term leading position in the Linux industry," Lambs said in a statement. Linuxcare didn't give a new date for the IPO but said the company and its investment bankers will work to determine the best time. "Given the environment on Wall Street overall, it may not have been an opportune time to go public," said Giga Information Group analyst Stacey Quandt. "The question is when one of these companies will become profitable." Linuxcare said in a filing that it expects to be unprofitable in 2000 and 2001. While that may sound dire, it's comparable to the expectations of the two largest publicly traded Linux companies, Red Hat and VA Linux Systems. Linux seller Red Hat expects profitability seven quarters from now, a spokesman for the company said. And VA chief executive Larry Augustin said analysts expect his Linux computer company to become profitable in late 2001 or early 2002. In 1999, Linuxcare had revenue of $1.5 million but a net loss of $21 million, according to Securities and Exchange Commission filings. About $10 million of the company's expenses were in the last three months of the year. Linuxcare provides technical support, education, consulting, customization and other services for companies using the Linux operating system. The company supports all of the major versions of Linux and many minor ones. It also plans to offer customized versions of Linux that companies will be able to label with their own brand name instead of having to subordinate their brand name to Red Hat, SuSE, TurboLinux, Caldera Systems or one of the other Linux sellers. The company received a $32.5 million investment from Patricof & Co. Ventures, Dell Computer, Sun Microsystems, Oracle and Motorola. Last year, Linuxcare acquired the Puffin Group, a consultancy based in Ottawa that was working on translating Linux to Hewlett-Packard's PA-RISC chips, and Prosa, a Linux consulting firm in Padua, Italy, whose customers include Telecom Italia and the Vatican. The Puffin Group acquisition cost $527,000 and brought in about $97,000 in revenue in the first nine months of 1999. Prosa, which cost Linuxcare $290,000, brought in $223,000 for the year.