Lineo Plans IPO

A reader writes: "According to the following Cnet news article, it looks like Lineo is planning to go public, despite the recent downturn in Linux stocks. I wish them luck."

Comments

Re:Is this really possible?

[andersen]

Yes, it is possible and legal. The open source stuff can be obtained (as you mentioned) from the developer info page. The software as an aggregate has additional licensing restrictions because the software as an aggregate is not all Open Source.

Just suppose that Microsoft included GNU grep as part of Windoze 2001 and provided the source code via their website. They can still distribute Windoze 2001 under their standard EULA. The GPL only applies to GNU grep in that case -- not the whole OS.

BTW, before you get too anxious, in addition to the closed source stuff, Lineo provides a lot of Open Source software to the community -- for example BusyBox, TinyLogin, uCLinux, PopTop, ThinLinux, and Lineo is a major contributor to RTAI (quoting from the developer web page). Just because Lineo's business model is not exactly like RedHat's doesn't make Lineo bad (if it was, I wouldn't work there).

Lineo are not friends.

[WasterDave]

It matters, fellow geeks, because Lineo are not friends.

Why? Because "You must complete a royalty-based licence with Lineo to distribute this product".

But! but! but! it's GPL'd!! Indeed it is. Let's look at what that means. IANAL: GPL means we have to make the source of any derivative product public, basically. So what's a derivative product?

"Lineo does not consider the following to be derivative works:
- a driver loaded as a module into the Linux kernel
- a module written to be plugged into an API defined specifically to support dynamic loading.
- a program which uses a library is generally not a derivative work of that library
- a library linked to a program is not a derivative work of the program
- a program running as a process on a Linux system is not a derivative work of the Linux kernel "

Pretty well everything that isn't the kernel itself. So, for instance if your software uses the shell included with Embedix, you pay the licence fee. Lineo is about closing as much source as possible, as fast as possible, and charging for it. I could go on, but I have other things to say.

Lineo is not about squashing Microsoft and crappy many-boot hideously-insecure operating systems. Lineo is an easy-in for getting to QNX, Wind River and anyone else in the same space. Now, don't get me wrong, Wind River aren't open source hippies either - given half a chance they'll sting you for the kind of money that would make Rational blush. There is mega money to be made in this sector, arguably far more than the desktop sector - and all Lineo want is (not having the actual figures) a dollar an unit and two grand per developer.

Quick aside: There are things going on with embedding BSD. Subscribe to freebsd-small. And don't forget those three words: "Royalty based licence" - and you were worried about Red Hat.

Dave :)

"Downturn in Linux stocks" ? Heh...

[Bowie J. Poag]

"Downturn" ? Thats putting it nicely! When a stock comes crashing down from $255 per share to $49, as is the case with VA Linux Systems, i'd call that something other than a "downturn". Theyre worth less than their initial IPO these days. Even worse is Red Hat, which is hovering around $19 a share. Makes me happy in a way..Happy I didnt put any money into either company's stock.

Its not surprising, really. VA Linux Systems is barely a blip on the radar when you look at the facts. It has the second-worst sales record among Linux vendors, weighing in at a measly 5% marketshare. Only one company is listed as doing worse -- "Fujitsu Siemens", at 3%. See for yourself here if you don't believe me. Congratulations to VA by the way, for defeating the massive Fujitsu-Siemens juggernaut. Heheh.

It could be worse, however. You could own some Red Hat stock, which has plummeted to $19 (as of the time of this writing) with no indication of stopping. Not a big surprise here either. Red Hat has no product. Whatever they try to sell for a couple hundred dollars can be bought at LinuxMall or CheapBytes for 99 cents.

Perhaps this is why you wont see any of the major Linux players backing any efforts to provide large-scale support beyond including manpages and HOWTOs.. If they did that, they would have no tangible source of income at all.



Bowie J. Poag

Linux (LNUX and RHAT) Stock Performance

[cburley]

A couple of posts here make some incorrect assertions about Linux stocks.

Here are the facts as I know them.

RHAT IPO'ed at a (split-adjusted) price of $7 per share. It is now trading at around $20 per share. It hasn't been below 2x its IPO price for a very long time now, and I'm not sure it ever traded at or below that level. (It actually IPO'ed at $14/share, started trading in the high 40's or so, IIRC.)

LNUX IPO'ed at $30/share. It is now trading at around $50, though it's been as low as $38 or so. In much less than a year (and even less than RHAT's publicly-trading lifetime), it's therefore been at least a 1.2x gainer for anybody in on the IPO.

So much for what RHAT and LNUX did, in terms of setting their IPO price, and are doing now according to the market.

For several months, starting roughly October 1999 and ending sometime early this year (January or so), Linux stocks generally had a phenomenally huge valuation as defined by the market, i.e. the public, but a relative shortage of available stocks. I.e. many people wanted to own Linux-related stocks and placed a high value on them, and the shortage of such stocks drove their values even higher.

This actually started a bit around RHAT's IPO, since it debuted on the market at, say, around $25, so people who bought it right then at that price haven't really lost much (except the opportunity to throw that cash somewhere else, where it might have gained more), if anything.

But it was the October-January period where things really got insane.

The most obvious result was that when LNUX started trading, people who were in on the $30 IPO price and sold right ASAP got prices in the $300/share range for awhile. Even weeks later it was still well above $100 (but see charts instead of relying on my memory).

Other Linux starts that weren't open-source "plays", such as Corel (CORL), got similarly goosed. Even stocks that people thought were Linux stocks (ADSP comes to mind) got very goosed.

People who bought these stocks because of an unreasoning love of the "Linux" phenomenon rather than looking at market dynamics generally lost out, unless they did it early enough to sell to others who were even less reasonable and thus bought at a higher price.

This happened in very short periods for the not-really-Linux plays (ADSP), and not-quite-so-short periods for the semi-Linux plays (CORL).

But even the pure Linux/open-source stocks, RHAT and LNUX, both saw huge run-ups in their prices in roughly a "bell curve" form, i.e. followed by run-downs.

In RHAT's case people who bought in early, especially at IPO time, did not get particularly burned. So far. Ditto with people who bought late (i.e. in the last couple of months or so), taking into account the present state of tech stocks, the markets generally, uncertainties about the economy, etc.

(In contrast, IIRC, MSFT was in the 100's for awhile in the past six months, and is now hovering in the high 60's; I'm pretty sure there's no intervening split.)

The most-burned people are those who bought LNUX off the IPO, right out of the gate, at 300 or so. These people must have never heard of "limit orders", and I felt bad for them the moment I saw those ridiculous prices.

Personal disclaimers start here.

I was in on the RHAT and LNUX "open-source friends" (my phrase) IPOs, so I got 400 shares of RHAT at $14/share, 140 of LNUX at $30/share, and turned a tidy profit on RHAT by selling early during the Linux phenomenon in a series of trades, first to reclaim my moderately tenuous cash position (100@72), then to take advantage of what I thought, then, were sufficiently inflated prices that I wouldn't cry in my chocolate milk if they went higher (100@110, then 200@120). It was tempting to cry when I learned the huge tax impact of short-term cap gains and I thought maybe if I'd held out for the year, I'd do better, but history appears to be well on its way to vindicating my decision after all.

Unfortunately, I, too, got somewhat caught up in the excitement over LNUX, seeing it gyrate around, so bought up 60 shares (mainly to round it out to 200), making my net purchase 200@90, so I'm presently in a loss position. This kinda hurts, since I'd considered selling at 127 to turn it into a donation to a charity, but not being able to reach my e-broker and generally dragging my feet meant I didn't understand well enough how to do that in a tax-advantageous way (turns out there's a multi-week lead time anyway). Once I lost that opportunity, I decided the cash I'd raise by selling wasn't worth it for the donation I'd make, and the need I saw isn't so great or so immediate.

So, I'm quite happy holding on to 200 LNUX and having no RHAT shares for now, because I've felt for some time that LNUX is more like the kind of company I, personally, would want to own/work for/whatever, though probably by a nose. (I am a RHAT customer, though to a modest degree; I've bought maybe 10-15 of their Linux packages over the past few years.)

Strictly speaking, I haven't realized any losses yet, and even though my present LNUX holdings are in an unrealized loss position, since they stem from profits made on RHAT, my net tradings in the 9 or so months I've done online trading (I'm a definite newbie) have been quite positive, realized and unrealized (the latter just for the moment, of course, but maybe even if LNUX went to $0 Monday; I haven't run the numbers on this).

Since cash isn't something I'm needing these days, it's quite easy for me to follow the usual advice about holding on to quality stock for the long term. I haven't done detailed analyses of any public companies vis-a-vis their earnings, but since I want to do something with the cash I had sitting around, and VA Linux (LNUX) consistently shows up as being a quality company (or, at least, a company that's about producing quality products), it makes sense to leave it there. (I've used other cash to invest in a couple of other stocks, BTW -- major companies known for quality that happened to hit hard times and, in my offhand opinion, got hit by market overreactions. I haven't sold these stocks, even though each has seen a significant run-up in the 30-50% range within a few months of my purchases, and I'm not sorry I'm holding on to them even though they're both basically back where they were when I bought them! Again, because they're quality companies, as far as I can tell, and I can't think of anything better to do with the cash.)

I will be very (pleasantly, I hope) surprised if I'm still holding on to these 200 LNUX shares in another 3 years, since this whole idea of not spending cash on toys still feels kinda new to me. (Gotta admit, the best investment I ever made was getting married; most of this "I" stuff really represents decisions made with at least some support from my wife, who is financially much more brilliant than I, but who is too busy and maybe too gun-shy to make online trades. I couldn't believe it, though, when those two other stocks were lookin' good, she said something like "I've got to get our retirement-fund accounts onto a trading system so you can trade those too!" -- sounds like a recipe for disaster to me. ;-)

Without getting into silly speculation and such, I do have some reasons to believe LNUX will do particularly well over the long term. If I had a bunch more cash sitting around, I'd probably buy more right now at $50 (and I sure as heck would have at $40).

That kind of play helped out my position on one of those other stocks: I bought 100@41, but then it dropped another 10 points, so obviously I'd miscalculated the depths to which the market would over-react. So I bought another 200@31, and though it's hovered lower on occasion, generally it's been well above my net purchase price of ~34. Needless to say that makes me very happy, but it's still unrealized gains, and that tactic works only when you've got the cash (I don't know enough about margin trading or other stuff; I'm talking simple buy/sell transactions, usually limit orders on volatile stocks like LNUX).

So, aside from some hoped-for goose on short-term trading of those 60 LNUX shares, which never materialized (and, besides, I told myself I was happy to own a round 200 shares even if the price went down, and that turns out to have been right), I've generally traded from the perpective of valuing the company's record of quality, deciding when it was under-valued (the other two stocks) or over-valued (RHAT), taking into account my cash position (need cash, have cash, whatever), and that has worked out fine, considering the novice I am.

But during this period the market has become quite a bit more savvy, IMO; IPOs are no longer seeing the ridiculous opening-day run-ups they were in 1998 and 1999 (maybe earlier; can't remember when I started watching CNBC instead of TWC or TNN regularly during the day ;-).

That suggests it might be harder to get as ridiculously lucky as I've been over the past year by trading with such short-term horizons.

But it also suggests maybe the time to start doing some long-term buying is approaching, as the ridiculously-over-inflated valuations come down to somewhat-over- and kinda-over- and even gee-isn't-that-kinda-under-valuation levels we're beginning to see.

Maybe the low prices will set the stage for a whole new round of newcomers into the sexy stocks of the coming day (techs generally, surely? but instead of Linux/biotechs/wireless, what?), newcomers who buy at outrageous prices and break LNUX's opening-day record (which it still holds, last I heard)...

...but I don't suggest any of y'all count on it, unless you're willing to use "play money" (which is basically how I treated most of that initial investment in RHAT and most everything it turned into when I sold it).

As far as ADSP, CALD, CORL, LinuxOne (LINX), and now Lineo, as well as others, frankly, I just don't get excited about partial-open-source companies. I don't think they "get it" well enough to truly compete in the space. The business models for pure OSS companies like RHAT and LNUX are tricky enough to get right; how can management of on-the-fence companies be quick enough to see and act on changes in the OSS landscape when they're still basically pining for the '80s-style proprietary models, hoping to recreate some of MSFT's magic? I generally don't care for loosely-focused organizations anyway, so it's not just an OSS issue for me -- though I do feel holding on to 200 LNUX shares is true to the notion of "putting your money where your mouth is". (Strictly speaking, I've generally not felt OSS itself is a huge money-making proposition, so much as an end-user-freeing proposition. See my old posts defending "free software" and the GPL on gnu.misc.discuss for examples of my thesis that OSS will end up being a "pull" concept in that it's only when the end users insist on it that it'll truly succeed. Since I don't expect it to be monopolized, I don't see a handful of companies make $Billions on it due just to that phenomenon, and that's (mainly) why investors and investor "types" have avoided getting into the "push" side of it (the side that creates the software). I figure they'll come along once they realize that closed software becomes so much less valuable as users demand OSS, due to new factors weighed into purchasing decisions (say, multiply cost of product by 5 to get long-term costs to us if it's closed-source), at which point they'll have to choose between to relatively similar avenues for software, closed or open, in terms of profit potential, or find some other field to exploit.)

And, as tough a time as LNUX and RHAT seem to have had for some, I think it's safe to say they've fared better for most than any of the partial-OSS stocks out there to date. (Note I don't consider companies that adopt Linux, like IBM, as a "partial play", but maybe I should. Haven't paid attention to IBM stock, though.)

And, from the beginning, I've been concerned about the substitution of "Linux" for "open source" or "free software" in the mind of the market as the phenomenon that's really going on here. As important as Linux is, I see it more as the poster child of OSS than as the most prominent of only a few success stories, especially in the long run, and we're only in the second or third inning of this nine-inning game IMO. That's why the "Linux hysteria" didn't ever bite me -- I just hoped it'd keep biting others long enough for me to turn a quick profit on those 60 LNUX shares, oh well -- and why I don't think the underlying value of pure-OSS companies like RHAT and LNUX have been in any way diminished over the past year, even if the "Linux" phenomenon (in the stock market anyway) has come and gone.

In particular, I'm still cherishing some technical issues I see as giving OSS some huge theoretical advantages that are only barely being recognized now, but might come to pass in a big way over the next 20-30 years. I've stopped talking about these in detail; not only do non-OSS enthusiasts, and even OSS enthusiasts, find my notions a bit "out-there", to realize them requires doing some things that even RMS has tended to resist (and I don't mean "loosening" the GPL in any way, nor do I mean his resistance is, for now, particularly harmful or wrong-headed).

So, I'm definitely not getting rich off of any of these stock trades, and don't expect to. But I don't need to be rich, since I'm incredibly handsome, and people like me! (Yeah, right. ;-)

Seriously, though, if I decide I need a bunch of cash, rather than try to trade stocks for it, I'll probably go do some consulting work or something. I kinda miss programming, actually...not doing it is starting to feel weird, but I haven't figured out which pet project to work on first....