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Strategies & Market Trends : Angels of Alchemy -- Ignore unavailable to you. Want to Upgrade?

To: TsioKawe who wrote (9634)	8/23/2000 11:10:41 PM
From: puborectalis	Read Replies (1) \| Respond to of 24256

VA Linux 4th-Qtr Loss Widens on Acquisition Costs (Update2) 8/23/00 3:51:00 PM Source: Bloomberg News Sunnyvale, California, Aug. 23 (Bloomberg) -- VA Linux Systems Inc., a maker of Linux software and computers, said its fiscal fourth-quarter loss widened on acquisition costs as revenue rose more than sixfold. The loss widened to $47.5 million, or $1.15 a share, in the quarter ended July 28, from $9.19 million, or $1.17, a year earlier. Revenue rose to $50.7 million from $7.84 million. VA Linux provides products and services to companies using Linux, a free computer operating system. While the Linux code is freely distributed, companies modify and tailor it for a fee. VA Linux is making acquisitions, including the $342 million purchase of Andover.Net Inc., to add products and services as demand rises, particularly from online companies. ''They are seeing significant growth because Internet companies -- Internet service providers and Internet infrastructure companies -- are still growing very rapidly,'' said Prakesh Patel, an analyst at WR Hambrecht & Co., who rates the stock ''buy.'' Excluding costs related to acquisitions, the loss would have been $4.08 million, or 10 cents a share, compared with $7.87 million, or 34 cents. On that basis, VA Linux was expected to lose 15 cents a share, the average estimate of six analysts polled by First Call/Thomson Financial. Sunnyvale, California-based VA Linux rose 1 1/8 to 37 1/8 on the Nasdaq. Shares rose as high as 41 5/8 in after-hours trading. It reported earnings after the close of regular U.S. trading. Adding Services The company is developing products and services with higher profit margins, including a service that lets customers pick the software programs they want included on server computers they buy from VA Linux, Patel said. They service will allow VA Linux to charge more than it can for hardware alone, he said. ''This quarter they made a lot of significant announcements that are in higher-margin businesses rather than commodity hardware,'' Patel said. ''There are tons of companies in Taiwan and places like that that can make these hardware components so it's hard to charge higher prices for them unless you combine them with some kind of service.'' The company will consider additional acquisitions in order to build its professional services and consulting offerings, as well as to add talented employees with a background in Linux software, said President and Chief Executive Larry Augustin. Excluding costs arising from acquisitions, the company expects to be profitable by the end of 2001, he said.