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Red Hat & VA IPO Speculation by CNET
diogenes write in to send us a CNet article that speculates wildly
about the IPO Intentions
of Linux Heavyweights Red Hat and VA Linux Systems.
Red Hat denies it (as always) and VA Speculates (as always).
Mentions Mandrake working at VA and wraps up with a bit
about Cygnus. I wonder where Linuxcare fits into all this,
but other than that, this a good summary of the picture right
now.
Just curious, what exactly is VA planning to do on the GUI front? VA being a hardware company, it should not have too much interest in creating yet another desktop project but instead it should help with current projects like GNOME or KDE (or both). It does not make sense for them to compete with RedHat Or Corel on software/distributions. Instead, VA should cooperate with them.
Free Software: the software by the people, of the people and for the people. Develop! Share! Enhance! Enjoy!
Does anyone have more details about this? It looks like the Linux desktop may be fragmenting despite being OSS. Hopefully they will address issues of compatibility before they get too far into the design process.
Arrg... not the one button thing again. I've got 4 fingers and one thumb on the mouse... why not use them all?
Jono
This is an advertisement or anything, but I love the Motley Fool ( www.fool.com). It's an especially kind place for new investors. They have plenty of FAQs, analysis, and active message boards for every stock.
They also have a site called www.foolu.com targeted at students with questions about finances and investing.
cpeterso
Given Penguin's fondness for issuing a press release everytime there's a traffic backup on the Golden Gate bridge I don't think the above speculation is too wild. Find me an investment banker who would back an IPO for a business less than a year old that's not doing anything terribly original and I've got a real-estate deal he just won't be able to resist.
You'd be suprised - I work for a very well funded high tech startup as the IS director. I kept getting calls from a VC on my voicemail (fsck him if he can't use email) inquiring about investment opportunities. So I kept turning the calls over to my boss (the CFO).
CFO calls him, turns out he really WAS trying to get hold of ME. How did he get my name? From the whois record on my domain...
Dave
(speaking as a recent va-hire)
Actually, since I've started here (2 months ago),I
can't believe how pleasant and professional the people I work with and the enviornment is. I havent heard anyone yelling at anyone (aside from the nerf gun wars and calls to the 'beer cubicle'), and I'm quite pleasantly greeted every morning (although Chris, all the bowing nonsense is beginning to get to me)..
- One very happy 'god i'm glad i'm in california and working on Linux stuff' VA employee.
-San Mehat
Senior Software Engineer
VA Linux Systems.
From the article: "and Red Hat, currently the most popular seller of the Unix-like operating system."
Perhaps that says everything about the future of this 'industry'. People are losing sight of the principles that
inclined them to choose linux in the first place.
__ jonl ex-sysop 201
Open an account with an on-line trading company. I recommend Datek. Altough I think their current minimum is $2K. But I think other may not have this constrain. Check them all and compare. Opening the account is free, and most of them offer some interest (usually higher than a bank) on money deposited into the account. Datek is in the process of offering a checkbook, so you can use it as a checking account.
_ _____
_______________________________________________
there are a lot of people working on non-kernel stuff here, but we do hardware, too.
but then again, my personal skillset isn't in the kernel but in other areas.
--
Geoff Harrison (http://mandrake.net)
Senior Software Engineer - VA Linux Labs (http://www.valinux.com)
Geoff "Mandrake" Harrison
Some Random UI Hacker
''I said, "Yeah, dad, watch out for ebay. I think they're going public. They should be a good buy." Too bad he forgot
Make sure to remind him of that every day from now on.
-fb Everything not expressly forbidden is now mandatory.
Another possible reason for making an IPO and letting the "overspeculation of a million tech-hyper investors" is to finance the free software. Think about it... If you're working to produce the best OS in the world and you want to spend all your time on it then why not let some financial weenies from wallstreet pay your salary. Or you could offer your best people stock options to encourage them to stay with you and not bail out for higher paying jobs. This is after all still a competetive industry and our economy is still based on making money to pay the bills.
just my $.02
"Understanding is a three-edged sword"--Kosh
Please forgive me if this is a silly question, as I know next to nothing about stocks and such. I do know that public companies set aside a certain amount of their stocks for employee purchase, which is set at a certain rate per quarter, often cheaper than it's actual value. This is called Stock Options yes? It's a great way to get rich if you're an employee of a up and coming company.
My silly question is this. Is it possible for say, Red Hat to sell stock options to free software developers who are not employees of the company, but obviously contribute to it's value. I suppose the SEC has rules against such a thing, but I think it would be really neat if free software developers could purchase stock like employee stock options if their software is used in the companies product, as if they themselves were actual employees.
That way, free software developers, who I would assume are mostly not rich, could actually get in on the ground floor of a Red Hat IPO. It would go a long way towards solving the problem of how to compensate free software developers I would think.
"I don't have a sense of humor" and "I'm a big-time moderator and I don't like what you are saying". Those are the reasons for demoderation. ./ used to be a very lively forum for wide-ranging discussions. Some the branch posts were much better than main-line posts. The occasional insults were often quite funny. ./ suffers now from too much focus on the current topic, long winded arguments which offend no one, and political posturing. Jeez, Microsoft trolls now even drop their propaganda here and people don't bother to respond with funny, knee-jerk because they'll be seen as "impolite" and scored -1. I think we should bring back some more of the flamings and reserve -1 for "Meept" and "First Post" and "Fuck You".
For instance, the guys at Yahoo let the guy who wrote perl
in on their IPO. The RedHat guys may ask the brokerage firm
that they're working with to let their friends in on the RedHat IPO.
This could be a good thing and could be a very bad thing for the Open Source community. On one had, the core kernel and other free software authors deserve something due to the fact that RedHat and VA are making millions on their work. It would also show people yet another way to make a living from opensource. The problem is how does a company decide who the early dibers[sic] are? Obviously guys like Linux, Alan, Tso, and the rest of the main kernel team deserve something special. But would this be upseting the contributors who don't get anything? Would it cause people to be much more careful about what work they contribute to open source projects? It could be a dangerous precedent and cause a lot of damage to the development community. I think both RH and VA should think very carefuly about how an IPO would affect the free software movement.
The only reasons they would need to go public (correct me if I'm wrong) would be to raise more capital, which they seem to have plenty of, or to have their stock go sky-high and then bail out.
Seeing as how they are not a public company and you haven't seen their financial statements I don't know how you can say they have plenty of capital. Here is a hint, these "investments" by Intel and the others are just Red Hat selling off part of the company. Now ask yourself, would you rather a portion of Red Hat be owned by the public, or a bunch of companies?
DrLunch.com The site that tells you what's for lunch!
Raster is going to be working at VA on GUI stuff,
probably seperate to Gnome and KDE. The fact some
old apple folks are now at VA is not co-incidental
folks.
You obviously have no clue. Those that know, know. Those that don't type in all caps. I doubt that Penguin will sell in a year what VA sells in a month. VA inked a deal with Flextronics to build a lot of their stuff. VA has sales people all over the country. VA bought their biggest competitor. The product isn't just a computer, the product is the computer plus the service provided. Digital had one of the best service units in the industry (*the* best?) and Compaq needed that, so they gobbled them up. Compaq didn't need their computers. They could have bought Alphas from them just like they buy Pentiums from Intel. Penguin couldn't even come up with an original logo, they had to use Tux, after everyone else in the community spent years promoting the image. Penguin will overtake VA about the time Microsoft abandons NT for Linux and hires Linus as the chief developer.
Now, whether Red Hat would be willing to do such a thing is another story entirely...
--
--
Just lurking, thanks!
My guess is that if you invest $1,000[US] into these two companies each, in 5 more years you will have at least $20,000.
Maybe I'm just optimistic though...
In the short term, we are trying to payback the community from whence we came in the following ways
Hosting projects
Hardware donations (debian/fsf/others)
Outright hiring people to work on free projects (those that have somethign to do with va nad those that have little to do with VA)
Joining organizations that we feel are important to OSS (li,x/open)
Donating to FSF
Running linux.com in a very community way
Of course open sourcing whatever we do.
Helping new proejcts get off the ground
Helping out lugs (somethign near to my heart)
Helping prominant developers with travel/hotel for tradeshows and such.
But we are not really satisified with just this. I'd actually like to solicit help, if you have a good idea, email me at chris@valinux.com with your suggestion.
Post IPO, look for us to
Expand the above
Endow open source chairs at universities.
Offer Scholarships.
Expand how we can help out in the lugs and such.
Offering financial/hardware support to those projects that we have not been able to help yet.
and more, hopefully.
This is obviously only the beginning, so there you go. Email me :-)
Chris DiBona
VA Linux Systems
--
Grant Chair, Linux Int.
VP, SVLUG
Co-Editor, Open Sources
Open Source Program Manager, Google, Inc.
Excuse me, but why was this considered as a -1 post!? I feel that I asked a valid question as Penguin is one of the newer companies out there and I was interested in what other thought of
them?
Deepak Saxena,
deepak@plexity.net
VA likes to pout around saying that they are riding on a paradigm, Linux. But they fail to see the two or more layers of paradigms that are coming. And they are coming so fast that in the end VA will look like just another ipo.com that went nowhere.
You just wait....
Actually if you read carefully, the article says that VA just hired a new CFO. But they already had one!(John Anderson) That means that the first one quit, and I know why: VA has a very rude environment. They go around yelling at one another, calling each other gross names, and don't even say hello or good-bye. Larry has a very permissive attitude about that behavior.
Don't believe the hype around VA. Just like there was hype around Netscape early on, and eventually the company failed, VA will end up gasping for life later. Take that from a former employee who was offered a large chunk of the company in shares without anything in writing!!
Chris DiBona
VA Linux Systems
--
Grant Chair, Linux Int.
VP, SVLUG
Co-Editor, Open Sources
Open Source Program Manager, Google, Inc.
VA is nothing compared to redhat. VA has many low paid assemblers working for them. Comparing VA employees to REDHATS is like comparing CHEVYS(VA) to BMWS(RD). REDHAT has only highly paid developers and administration working for them. The only major company to invest in VA is INTEL and INTEL invests in lots and lots of companies. REDHAT has INTEL, NETSCAPE, IBM, SAP, ORACLE, NOVELL, COMPAQ, DELL, AND TWO MAJOR VC FIRMS. REDHAT is a major software company whereas VA is going to get their ass kicked when DELL COMPAQ BIG BLUE AND COUNTLESS OTHERS start going full steam with linux. And what does board of directors have to do with anything. By the way REDHAT has lots of ex Netscape people working for them. REDHAT can be compared to those former great IPOS, whereas VA sells a commodity goodS and is a manufacturer. Manufacturing is obsolete(soon to be left to the KOREANS AND CHINESE), money is in intellectual goods. By the way Larry Augustine is'nt even good enough to carry BOB YOUNG,S or MATHEW SZULICK,S jock straps. The success of Penguin computing shows how easily VA model can be emulated, whereas capturing intellectual marketshare is next to impossible. A Commodity manufacturer such as VA cannot be compared to REDHAT which had more than 70% share in the next major computer revolution. And hiring two toy designers such as "MANDRAKE" & "RASTERMAN" does not make VA a software company. I can see Penguin computers having a better valuation and name recoginiton, just because of its unique name ala YAHOO(i get so tired of Larry Augustine claiming that VA is going to be bigger than YAHOO-in your fantasy). Hire couple of managers and PNGN(nasdaq listing) will kick VAs ass just on the name alone.
Do they even need to go public? As much as I would like them to offer me a job and make me rich, do they even need to go public? They have people like Netscape/AOL and IBM investing in them. They can live off that pretty well and continue to grow. The only reasons they would need to go public (correct me if I'm wrong) would be to raise more capital, which they seem to have plenty of, or to have their stock go sky-high and then bail out. This is what tech companies tend to do, but why should they? If Linux really is the next-big-thing, they can just wait until it really takes off, and then both Red Hat and VA (as well as their long-time employees) should be raking in big dough on their own merit, not because of the overspeculation of a million tech-hyper investors. Am I wrong here? Why should they go public? They have more than enough momentum and private investment that they can survive quite well until they hit the big time. True, they could become a billion-dollar company overnight if they went public, but they wouldn't own as much of that company any more. Why not wait a few years and try to become the billion-dollar company on their own merit?
Unfortunately, you can't get in on the ground floor. A company issues stock through a financial company. They have to set it at a "reasonable" price. It then gets issued to important customers at whichever big firm is issuing the stock. It goes from there. With a highly visible company like VA or RH, the stock will jump immediately to something even above even the most optimistic Linux-lover's expectations. Of course, it will probably go up even more. It wouldn't be a matter of judging how well the company would do but how well the other people think it will do. Will the stock jump from a "fair" price of $14 to $30 or to $100? That's the game.
:)
I said, "Yeah, dad, watch out for ebay. I think they're going public. They should be a good buy." Too bad he forgot
There are two motives here:
1) run a successful company
2) Make as much Money as Possible.
Certainly, #2 is a huge motivating factor, and going public is the best way to accomplish it.
Chris DiBona
VA Linux Systems Inc.
--
Grant Chair, Linux Int.
VP, SVLUG
Co-Editor, Open Sources
Open Source Program Manager, Google, Inc.
Note: The above post was moderated to -1 for Trolling when I posted this. I am NOT the author of the original post.
I don't believe in complaining unless I'm going to do something to help. I'm going to reset my preferences today to make me eligible for moderation. Now, I can start complaining.
Perhaps some consideration should be given to the down-moderation reasons. Right now, we seem to have "Troll", "Flamebait", "Redundant", and "Offtopic". I would humbly suggest adding "Offensive" for the deliberately offensive posts.
Judging from the moderation I've seen lately, we may also need to add a few more reasons: "I don't have a sense of humor" and "I'm a big-time moderator and I don't like what you are saying".
To describe someone's post as a "Troll" is insulting. "Troll" should be reserved for cases where the post is clearly intended to elicit responses with no meaningful purpose. Calling a post a "Troll" presumes that you knew the intent of the poster. I don't see anything in the above post to indicate that the poster was deliberately trolling.
If there was any reason to down-moderate the post, it would be "Offtopic". Unfortunately, it was only last week that I saw an article on Northwest Airlines using Linux which lead to several posts about whether or not FORTRAN is relevant today. Many of these posts were moderated up several notches.
With these standards, I see nothing "Offtopic" or "Troll" in this post. The article was discussing IPOs of Linux-oriented companies. The poster raised the possibility of Penguin Computing making an IPO. Now, if they work for Penguin Computing, this would be a troll. Otherwise, I'm kind of interested in responses to the post.
The reason companies are created is to make money. The reason that companies go public is to grow and eventually make more money. If you don't like it, go join a tribe in South America and live off the land.
The companies that are making money from open source software may be run by people who believe that the open source movement is a good thing, but they are not in business simply to promote it. Those who do care more about the movement than the companies should try to gain influence over the companies.
I wouldn't worry as much about M$ or IBM muscling their way into Redhat's or VA's business (the SEC has rules about this) nearly as much as the toll of being a public company would take on them. From SEC red tape, to a PR dept. making sure press releases don't cause the stock to drop, to
having to meet quarterly quotas, to dozens of other worries, going public is serious business.
1) When a company goes public, they have to keep an eye on the stock price because they are legally committed to making a profit for their investors.
2) A public company is exposed to hostile (or at least not-so-nice) takeovers that can result in major dislocations of employees and product support--even the possibility of dropping a product line.
3) Usually, investors don't try to micro-manage the company, but investors with a significant % of shares can create havoc by voting for/against members of the board of directors and other issues.
I like the posting suggesting that an "Open Source" mutual fund be created. This is an excellent idea because if there were an "Open Source" mutual fund, it could be chartered to help alleviate the above pressures put on companies by investors. This would also provide a source of capital with "pure" motives.
The purpose of the fund could be designed to be supportive, such as requiring that as much as 25% of the investment money be put into start-ups that meet certain requirements. These requirements could be using open source licenses for most of their software, or supporting open source software in most of their customer contracts.
The fund could be modeled on the "Social Conscience" funds (for instance, investing in companies that are pro-environment, etc.). I don't know if it would have to invest in public companies only, but I suspect that if the charter was clear, it would not have to limit itself to that.
The obvious question is, "Who would invest?" Well, since IBM, Intel, etc. have already started, I would say that once the fund was set up, it would probably have no trouble attracting investors. And since the charter would plainly state that it's intention is to invest in companies for the purpose of encouraging the open source movement, no one could easily corrupt it. I would like to see that the minimum investment be no more than $1,000, and preferably $200.
Finally, this could be a way to reward the individual contributors of open source code. The fund could set aside some shares that would be given to programmers using open source licenses. Or the fund could provide something like the grants that are given to universities for specific projects.
Do we have any financial movers and shakers that know enough about this to get it going?
>It's time to hitch your wagon up to the OSS train.
God. It looks like the fraud artists really are starting to crawl out of the woodwork, and onto the Internet,doesn't it?
HJ Liu - NFS/Bin Tools
Hell larry's done some kernel code (the one I remember is the 2.0.x patch to detect the >^4 limit on some bios'). We are a little light in the kernel space though, but we make up for it in otehr areas, we're pretty happy about the team we are growing here. This is not even mentioning San Mehat, Mandrake, Mark and the rest.
Chris DiBona
VA Linux Systems.
--
Grant Chair, Linux Int.
VP, SVLUG
Co-Editor, Open Sources
Open Source Program Manager, Google, Inc.
...how do us poor students get in on this?
Serious question: How does one go about investing $100 to $500 in an IPO? Is it possible for the little guy to invest and benefit, without having a brother-in-law on wall street?
Posted by d106ene5:
They aren't paid to surf the cruise the mailing lists all day. Set up a company yourself and you'll find out in about a week that the web can be a major productivity killer.
Anyway, ll they make is PC clones. What are they supposed to add? It's not like their computers have any custom hardware. Every part can be bought down at Fry's.
VA is nothing compared to redhat. VA has many low paid assemblers working for them. Comparing VA
employees to REDHATS is like comparing CHEVYS(VA) to BMWS(RD). REDHAT has only highly paid
developers and administration working for them. The only major company to invest in VA is INTEL and INTEL
invests in lots and lots of companies. REDHAT has INTEL, NETSCAPE, IBM, SAP, ORACLE, NOVELL,
COMPAQ, DELL, AND TWO MAJOR VC FIRMS. REDHAT is a major software company whereas VA is
going to get their ass kicked when DELL COMPAQ BIG BLUE AND COUNTLESS OTHERS start going
full steam with linux. And what does board of directors have to do with anything. By the way REDHAT has lots
of ex Netscape people working for them. REDHAT can be compared to those former great IPOS, whereas
VA sells a commodity goodS and is a manufacturer. Manufacturing is obsolete(soon to be left to the
KOREANS AND CHINESE), money is in intellectual goods. By the way Larry Augustine is'nt even good
enough to carry BOB YOUNG,S or MATHEW SZULICK,S jock straps. The success of Penguin computing
shows how easily VA model can be emulated, whereas capturing intellectual marketshare is next to impossible.
A Commodity manufacturer such as VA cannot be compared to REDHAT which had more than 70% share in
the next major computer revolution. And hiring two toy designers such as "MANDRAKE" & "RASTERMAN"
does not make VA a software company. I can see Penguin computers having a better valuation and name
recoginiton, just because of its unique name ala YAHOO(i get so tired of Larry Augustine claiming that VA is
going to be bigger than YAHOO-in your fantasy). Hire couple of managers and PNGN(nasdaq listing) will kick
VAs ass just on the name alone.
It appears that we are at the beginning of an exponential growth in Linux distribution. That's precisely when an IPO is most useful, since value will continue to accumulate for a long time to come.
What puzzles me is why Augustin is puzzled over how to compensate Linux developers.
Well, let me back up: it's absolutely terrific that Augustin wants to secure some sort of compensation for Linux developers.
But why is he puzzled about it? The answer seems obvious. Dedicate a chunk of stock to be distributed across the developers. Stock can be gifted, you know. Perhaps someone from within VA (Chris?) could give us some insight on Augustin's thinking.
Then, when the company goes public, the developers can (after a year, I believe) get some monies out--perhaps to help support additional development.
Another interesting question is how the rest of the Linux--Open Source, generally--community can be allowed to get a stake in the growth of Open Source.
Perhaps a Linuxphilic Mutual Fund could be set up which invests largely in Open Source dependent companies.
Does anyone know how to go about doing this sort of thing?
Of more immediate concern are the impending IPO's.
Perhaps if a fund were set up to allow rabid open source fans like myself to collect together a huge amount of money, and then do the hardest thing possible--get in on the ground floor of an IPO.
To those who fear IPO's as risky: You are quite right to be cautious. But the growth of OSS, and the frankly astonishing growth of companies like VA (as I lovingly caress my VARstation) and Redhat, makes these IPO's a very different proposition from the typical IPO.
Keep in mind that stock markets are a good investment only so long as companies continue to grow. Can't we be somewhat confident that OSS will continue to grow?
I think we can. I've read the arguments in favor of OSS--I've even given some of them in my IT-Ethics class. The arguments in favor of OSS over CSS--some ethical, many economic--are all fo them sound. OSS will continue to grow.
It's time to hitch your wagon up to the OSS train.
I met this kid and he is one smart and polite guy. In one year he has almost caught up with VA or close to it. Just shows you that VA is just smoke and mirrors
Congratulations to everyone who works at that great company. You deserve this for making Linux the great success it is.
Don't forget Penguin Computing. They're new, but
from looks like they're growing pretty quickly.
Am I the only one who has the impression that Red Hat and Transmeta has grabbed most of the Linux 'top kernel hackers'? Alan Cox (generic 'stable release' guy) and David Miller ('all things networking') are working at Red Hat, amongst others. Linus Torvalds and other kernel hackers work at Transmeta. On the other hand VA Research does not seem to be very active, at least judging from their employees' (lack of) activity on Linux-kernel mailing lists. VA Research has donated hardware to some Open Source projects, but otherwise they are quite (very) inactive.
x% of RH stock. Just 'cause it's not publicly traded doesn't mean it's not a corporation.
--
is it time to buy into the company? If either goes public they will have to answer to stock holders. M$ could get there paws deep into Linux.
as far as them mentioning KDE and GNOME, both are good, but they both have there bugs. KDE apps don't always work well with none kde apps. GNOME can let a user really screw up the UI if they don't know what they are doing.
It woud lbe nice to see some of these open source projects unite, and form 1 window manager that is ultra lit, and 1 desktop that was super configurable.
yes kde is very configurable, it should make it easier for someone to set up app to launch thru kfm, a nice GUI setup tool. I'd write one but I don't know qt or kde progammin and don't have the time to learn.
GNOME has some nice features, but without a 3 button mouse or 3 button emulation E wont pop me up a menu. I have also been prone to loose the gnome_task bar thingy.
I use afterstep mostly. It is fairly easy to create themes. It is faily light in footprint.
now off topic.....
hey I amentitled to my opinion you don't have to like it. It would just make it easier if there was one standard. I could write an app and it coudl be used by those who like ht e'kde' look and those who like the other looks.
Only 'flamers' flame!
Mandrake is working at VA. That is why Raster left RedHat to move to the West(VA).
_ _____
I think that Mandrake lure Raster into joining him at VA.
_______________________________________________
Whoever gave them their existing capital undoubtably did so under the notion that they would go public soon.
The golden rule: whoever has the gold makes the rules.
Instead of letting the big guys have first dibs at the IPO, why not let kernel contributors and other free software authors get at it? That way, everyone is happy. VA and Red Hat IPO, and the authors of all of the stuff they're making money off of get rich.
There are several reasons to go public. One of the main reasons is to give their employees a big incentive to make sure the company does well. Another reason is to dilute the influence of previous investors: IBM, intel, Dell, etc. Relying on big friends makes you dependent on big friends. If your major investors gang up on management, they can force them out; if they have to get a near unanimous consent of the non-big share holders, then they can't arbitarily screw with management. The primary reason is, as you pointed out, to raise money for further investments. Red Hat may simply need more money that what IBM's willing to give them inorder to put Linux on every desk top.
From PC Week's rumor collum:
"... Morgan Stanley has been seen skulking around Red Hat Software's Durham headquarters in advance of underwriting the company's IPO, which is scheduled to happen later this year. Another Linux vendor, VA Research, is hellbent on beating Red Hat to the punch as the first major Linux developer to go public..."
Get your contracts out and hope like hell there are stock options in them, you lucky Red Hat and VA Research employees. History holds true, you have a load of money coming your way.