Mandrakesoft Acquires Conectiva

rednaxel writes "This morning, both companies issued press releases about the merge. French Mandrakesoft is acquiring all shares of brazilian Conectiva for a total amount of 1.79 million EUR (2.3 million USD) in stock." CNet has coverage of the merger as well. From the article: "This won't elevate us to the status of Red Hat or Novell/SuSE yet, of course, but this is a significant growth for us..."

Comments

How?

[sfraggle]

How do they have the money to do this? Werent they almost bankrupt about a year ago?

Re:How?

[ReverendLoki]

Actually, I think it was 3 or 4 years ago, but not only were they almost bankrupt, they actually were in bankruptcy in the French court system. They got their act together though, and have come completely out of bankruptcy, and I believe have been in the black for a while now.

As far as I know, their main sources of revenue are from consulting, corporate support, some value added like packages of various proprietary closed-source software to their OS, and through their club membership program. I understand that this last one has been a decent boon to their books, moreso than one may think. Of course, I am not an accountant...

Re:How?

[morcego]

I find this particularly intriguing, since ABN-AMRO Bank has been the major shareholder (50%+) of Conectiva last time I checked. Most than US$ 2Mil worth of stocks.

Anyone knows how much (if anything) of Mandrake stocks are held by ABN ?

Looks like (from the numbers) Mandrake is getting only the remaing stocks still help incompany by the original founders of Conectiva.

Unless there is some big involvment of ABN on Mandrake, I find this all very strange.

Re:How?

[DCowern]

How do they have the money to do this? Werent they almost bankrupt about a year ago?

First, their financial situation was never as bad as it sounded. They had no money and couldn't fulfil debt obligations because a previous board of directors had moved them into to many business areas that were too far removed from their core business model (which has always been selling support and services to corporations).

Once they axed the former board, ceased unprofitable ventures, and got back to their core profitable model, things quickly improved. Their financial reports and quarterly summaries on their website go in to much more detail.

Secondly, they beefed up their Mandrake Club offering. It's currently a substantial portion of their revenue (I want to say 20-25%).

Third, released a bunch of stock a few years ago in an attempt to raise capital to renegotiate and pay off debt.

Lastly, the rules governing bankruptcy in France are far more forgiving and lenient than they are in the US. Mandrake wisely used the time and mechanisms that the bankruptcy filing awarded them and they're now seeing the benefits as they are on extremely sound financial footing.

By the way, yes, I am a shareholder and this news makes me very happy. The leadership at Mandrakesoft over the past few years has been excellent and I have faith in their ability to grow their company. Besides, with a 300% rise in their stock price in the last 4 months, I can't complain too much, now can I? =P

Re:How?

[DCowern]

Facts, please.

Mandrake club is currently less than or equal to 28% of their revenue, not the 80% you claim. From their latest quarterly summary:

Product sales amounted to 51% of revenues, enterprise services 21% and online sales and services 28%.

So you're dead wrong about where their money comes from.

Also, your numbers are slightly off. According to that same report, Mandrake is worth about 40 million euros (market value); that's about 50 million USD. Sure, they're not the size of RedHat but that's one of the reasons I like them.

I don't know where you got the loss figure from but I bought the stock at 2.1 euros. On 4 August 2004, it was 2.39 Euros. It is now 7.60 Euros. Unless Canadian math is different than American math, that's a 317% growth in the period from August 2004 to February 2005. Overall, that's a growh of about 361%. That's not a bad return over the 2.5 years that I've owned the stock

Representing your opinion and numbers you pull out of your ass as fact is embarassing when people call you on it, eh? ;-)

And oh, by the way, I happen to like M. LeMarois. He's always been cordial and straightforward in my dealings with him and he seems to have a good idea of where the company should be headed. That, of course, is just my opinion.

What does MandrakeSoft gain?

[kevin_conaway]

I'm not terribly familiar with Conectiva. What does the Mandrake distribution gain with this merger? Just more experienced developers or did Conectiva have certain features that made it attractive? Or are they just combining forces?

Re:What does MandrakeSoft gain?

[leoboiko]

Conectiva made apt-rpm. They also made the smart package manager, which I think is underrated. I hope the Mandrake guys see its potential.

Conectiva Linux will not exactly shift to urpmi, but instead it will be merged into Mandrake Linux.

And remember guys, we're called Conectiva, with a single "n".

Re:What does MandrakeSoft gain?

[leoboiko]

Sorry, Lucio, but our country is spelled "Brazil" (and therefore "Brazilians") in English, and this is an English-speaking site. But we have a lot to be proud of from Conectiva, including tosatti, acme, apt-rpm, synaptic, smart, the vesa driver for X...

Re:From the press release:

[Emporerx]

I don't know about Europe, but I thoroughly enjoy Mandrake. I'm wondering what, if any, effect this is going to have on future releases.
I'm biased because Mandrake really got me into the linux field and away from Micro$oft products. And linux has made computing fun to me again, which has not been the case for some years now.
I say, if they are trying to make things a little more uniform with these sorts of mergers(software, releases, security) then yay for them. Let's see how it turns out.

Been with Mandrake for years

[kbahey]

Being a Mandrake user for several years, I am happy to see that they overcame their financial difficulties and are in a position to expand.

Apart from the botched 9.2 upgrade debacle, they have a distro that I can use for a Linux home network without spending too much time on it. I have four machines running Linux at home, and don't want to spend a lot of time on each configuring it.

They are also familiar and friendly enough for my kids to use it as their only desktop. They get to play their MP3, use FireFox or Konqueror, use Open Office for homework, ...etc.

Moreover, it is also perfectly good as a server for LAMP, Samba, ...etc.

Go Mandrake!

Re:Been with Mandrake for years

[isotropique]

Mandrake is a company from France. They put a lot of efforts to document and translate Linux applications in french for their own market. I think their acquisition of Conectiva follows the same logic. Portuguese speaking people should be pleased by the announcement since it means more applications will be available in their own language.

I'm from Quebec and my primary language is French. I do not use Mandrake Linux but I feel their implication in the Linux movement improved my own experience. Vive Mandrake!

Re:Novell/SuSE

[Wudbaer]

Novell bought Ximian, not Xandros. Also cool stuff but different company. :-) Or did I miss something ?

Re:From the press release:

[AkaXakA]

As if Suse, being based in Germany suddenly don't count anymore now they've been bought by (the American) Novel.

Actually, after this merger, only Red Hat of all the big distro's is still on it's own.

I wonder how long that'll last. Then again, who's left to buy them?

Re:Thank you.

[morcego]

I'm sure it is very good for Mandrake, for the reasons already posted by several others here (mostly the brazilian government). And it will come pretty cheap for them, all things considered. If they invested that kind of money in comercial operations in Brazil (marketing, offices etc), they would not be able to get 10% of the market they are getting this way.

For Conectiva, I'm afraid to guess.

Conectiva turned into a profitable company mostly by firing employees and closing offices. That is what you get when you have a bank as the major shareholder of a company. Also, a good share of the technical ex-employees left on their own, instead of being fired, and opened their own companies. From that, you can see how much potential market was there. As far as I know, all those companies are profitable (although they are much smaller than Conectiva).

When RedHat opened their office here in Brazil, it was maned almost entirely by people that have left Conectiva.

On the other hand, I always considered Conectiva Linux technicaly more advanced than Mandrake.

So, IMHO, if we can join Conectiva's technical expertise, with Mandrake's comercial expertise, we might end up with a very nice company.

I have tried contacting a couple of Conectiva founders (board members) since I've heard of this. Got no answer so far, which is probably to be expected.

Re:Thank you.

[morcego]

Just as an extra note, we don't know where this shares are coming from.

Are their the shares still held by the original founders, or are they the shares that ABN-Amro Bank held ?

If their are the shares held by the original founders, one has to guess how many shares of Mandrake are held by ABN, and if this is some kind of twisted move from ABN to get a hold of Mandrake too.

Re:Mandrakesoft = (very) profitable company

[joestar]

Do the ratio: 1.8 income / 6.7 revenues = 26.8%. Quite efficient.

Nice merge ...

[wagner_bila]

Well, i have Mandrake Community 10.1 installed on my linux box (my notebook) and i always heard good things about Conectiva and its developers. Since i'm also brazilian, i feel very greatful with the fusion ... i think some good products can be build now on with this merge. Also Brazil has a strong movement to the open source software and the open source initiative and also has a great potential to grow too ...

My note on Mandrake Usability.. it 'just works'

[hyfe]

I'm posting this from my dell inspirion 8200 laptop running Mandrake 10.1. Mandrake installed advanced power savings, sound, network (including wireless with a little extra work) and graphic card automatically no-hazzle. This is alot better than what the other distroes I've tried have managed. (and yes; I'm one of the funny people who prefer that things 'just work')

Debian; I never managed to get the ATI drivers to play nice with my card (and this wasn't for lack of trying)

Fedora didn't want to give me sound, nor did it give my laptop power-savings.

Suse I never tried, and compiling/Gentoo is out of the question.