Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: puborectalis who wrote (9635)	8/23/2000 11:26:24 PM
From: puborectalis	Read Replies (1) \| Respond to of 24256

Tuck Away That Tissue, Linux Investor By Tish Williams Senior Writer 8/23/00 7:59 PM ET Oh dour, depressed Linux investor, happiness is at hand. VA Linux (LNUX:Nasdaq - news) unburdened the skeptical hearts of Wall Street Wednesday with 46% revenue growth to $50.7 million in its fiscal fourth quarter from its third quarter. Despite finishing up the acquisition of Andover.net in the quarter -- Andover.net was expected to have a loss of its own -- the Linux server maker and consulting services company also trimmed its loss to 10 cents a share, or $4.08 million, in the quarter ended July 28, from 13 cents in its third quarter. Analysts surveyed by First Call/Thomson Financial anticipated a loss of 15 cents a share And that's not the best part. Wall Street had hoped to see improved profit margins for the firm. Young Cobalt (COBT:Nasdaq - news), by comparison, has perky margins of 47%, while VA Linux's fiscal third-quarter margins were a cloudy 17.8%. Tuck away that Kleenex, downtrodden Linux investor, VA Linux offered up a sparkly gift-wrapped gross profit margin of 22% in the fiscal fourth quarter. "That reflects greater economies of scale, new products and higher margins in our Web business relative to the systems business," CFO Todd Schull said in a conference call. Schull added that he expects the gross margin to climb, albeit at a slower rate, throughout 2001. VA Linux is gunning for 27%. CEO Larry Augustin touted the gross-margin improvement early and often in the conference call, along with a healthy display of respect for profitability. Yet CFO Schull quashed any wishful thinking that VA Linux would break even before its stated goal of the end of 2001. VA Linux is busy staffing up its sales and services organizations and working on an office expansion. Back on the bright side, however, VA Linux held on to its customers for repeat business that brought in 80% of its revenue. No. 1 on the list of friends to invite to VA's next sleepover was Akamai, which accounted for 21% of that business. Server sales made up 75% of VA Linux's business, while a burgeoning professional services operation accounted for 15% of revenue, with the final 10% made up by Web-related revenue such as online advertising. And, for those still nervous about our unprofitable playmate, VA Linux has $176 million in cash and equivalents in the bank. Ah, that feels so much better.