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Red Hat IPO All Over the News
Most small company IPOs have at least a little disorganization and hype surrounding them, but Red Hat's was over the edge. We're not even going to try to sort out the claims and counter-claims, the complaints and counter-complaints, and all the rest, just point you to a selection of stories on the subject, not all of which agree 100% about exactly what happened, when it happened -- or to whom.
- Late IPO change left many red-faced at C|Net.
- Red Hat charges up 272 percent in debut from ZDNet
- Geeks Tip Their Caps to Red Hat at Wired News
- Share Price More Than Triples in Red Hat's Public Offering from the New York Times (free registration required to read)
- The Tech Investor column in the Aug. 12 Washington Post talks not only about Red Hat, but other recent IPOs. Good perspective piece.
- Red Hot (with a cute "hat" graphic) headlined Salon's take on the subject.
1) This stock closed today at about 4 1/2, with a market cap. of 280M, which is definitely undervalued given the background of this company (and even more undervalued if you compare with Red Hat!).
2) Sales of 70M last quarter, profit expected this year.
3) Word Perfect already ported to Linux, they are currently working on Linux Office 2000, their beta Corel Linux distribution is gonna be available next month. I can't see a more Linux-friendly investment!
You people should stop complaining that you could'nt buy cheap RHAT stocks yesterday...you can get a better play (CORL) for a cheaper price!
Just my 0.02$
One of the sources must have been the HOWTO list since other things (besides patches & enhancements) I released under GPL are not in RedHat.
I wish that the IPO had not been restricted to US residents, this majorly sucks and has been predictably ignored by the majority of the mostly US-centric online publications.
Linux has been created through the work of people that reside in many different countries, and thus some method should have been set up to help them partecipate in the IPO if they so willed.
Hear me well: I did not do any of the work I did for Linux and the FSF in order to earn money, I did it in order to be able to give something back to the community, God knows that it would have taken me a lot longer to get my Masters if I wouldn't have been able to install Linux (1.1.something back then) at home rather than have to take the train to the University lab every day.
Let me clarify, I am not upset because of the economic side of things ( even if I could sure use some extra cash ) but because of this offer's US-only nature.
Now let me step off my soapbox and get back to work.
-- the cake is a lie
Single-share stock price is meaningless. MSFT would be trading at over $1000/share now if they hadn't split the stock numerous times.
More meaningful figures:
Microsoft Market Capitalization: $475 billion
Red Hat Market Capitalization: $5 billion
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
In some ways, what you say makes psychological sense. We already know that managerial turnover at MSFT is high, and that MBAs don't want to work there, but rather in startups. If they and the developer trainees start noticing that RHAT is flying up while MSFT is not, they may sense that the wind is shifting and reevaluate their career plans. This will raise the labor component cost for MSFT and help with mindshare shift in the tech and business communities.
... I might be a tad happier, but right now I've got $51K burning a hole in my pocket and no shares to show for it.
But, as someone else noted, Red Hat's total valuation in no way compares to MSFT's. But who knows, we may make Fortune 100 by year end!
Now if E*TRADE would just do something for those of us not in the Affinity program but who had confirmed by phone re the $12-$14 range
I wonder how expensive it was for them to fill all those 8000 rejected allotments from their float? Let's see, 8000 x (72-14) x 100 shares = $48+ million. Assuming the average fill was 100, since some got 400 but some had been accepted. Hmmm.
Will in Seattle
When you say dethroning Microsoft, I hope you mean from the OS/Server market, because that's as far as its going to go.
.1 % of his shares and buy Red Hat outright.
Microsoft is the second largest company in the world, which means they own shares of a ton of other companies, and they're involved in a dozen of other industries. They're in hardware, entertainement, TV, cable, telecommunications and even art!
This Red Hat IPO is a good thing, and it's good news for the Linux community, but Bill Gates can get rid of about
Also, keep in mind that because things are going well now, it doesn't mean they'll always be like that. Remember when Java was supposed to replace C++? Could anyone have predicted competition for Windows before Linux? Don't think so.
"Know the facts before distorting them"
- Ernest Hemmingway
BH
Hee hee hee! That's a good one!
Obviously, these reporters never read
For that matter, how important is a cooperative mood to the success of Linux? Who really needs to cooperate besides people in on the same project? Personally, I think the competative spirit between projects like KDE and GNOME does a lot to help 'the cause' (as long as they can agree on some common protocols)...
--
"Convictions are more dangerous enemies of truth than lies."
The article was talking about the climate of IPO's in general. It wasn't saying that RHAT will crash back because of BEOS.
I dont care what anyone says. I bought Redhat stock and made a 50% profit in one day. If it makes me money i am not complaing much about anything. Let it become a bloated microsoftish evil empire. ill just go with Debian...or if i get tired of Linux...FreeBsd!
I say great for any programmers that made money in the IPO. Now quit your day jobs and work on Linux full time and make me a better OS. :)
I really think we're all totally missing the big picture here..We're all getting pissed off about money. We really shouldn't be. When you step back and look at it, ignoring all the buzz and all the numbers, the money doesn't even matter. I mean, think about it..Did you get involved in Linux because you thought it would make you money? Or we doing all of this because you believe in the platform? For me, its the latter. I like Linux. Infact, I like it enough to devote some of my time to making it better.
What matters is, we're moving ahead. All of us. Not simply a bunch of guys who either got incredibly rich by pure luck or got rich by lying their way into an IPO. Sure, everybody loves the money..but getting rich isnt a necessary part (nor has it ever been a part) of the process of improving and strengthening Linux.
The fact that Red Hat's stock sits at $73/share right now isnt going to stop me from doing what I do, and making what I make. What the Linux community is doing right now is a necessary step on the way to dethroning Microsoft. Part of that means becoming a household name, which we're well on the way to doing. Somebody has to hit the beach first -- and for us, that happens to be Red Hat.
Were at the beginning of something big, not the end of something small.
Bowie
Founder, System 12 / PROPAGANDA
Bowie J. Poag
Bowie J. Poag
I have a friend who got notified by E-trade about needing to resubmit his Intention of Interests. He called TWO hours after the letter was sent. They told him it was too late. He had submitted a request for up to $20/share last week, but for some reason that didn't cover the $14/share it opened at (okay!?)
Anyway, with in one hour of his denial he was filing a complaint with the SEC and is currently looking to find a lawyer to sue E-Trade.
All I have to say is that the timing of the last minute change in price and demand to resubmit are very suspicious. Exactly HOW many people got SCREWED by this?!
Teach a man to dish and he will gossip for life.
From what I have gathered talking to several Etrade reps is that there were 4 different programs for the IPO.
- Affinity (the Open Source community folks)
- Public (your average trader)
- Employees of RedHat
- Friends and Family
I was lucky enough to know someone at RedHat and got in with the Friends and Family program. The employee gave my name to Etrade who then automatically entered me for 500 shares at the opening price. All I had to do was get the money there. When everyone was worrying about filling out a profile I called and found out that this program didn't require that...but only after talking to three different Etrade people (an IPO rep, a broker, and finally the directed shares coordinator).
Similarly, when people were being told to reaffirm their desire to purchase after the price went up, I found I didn't have to. But, I received the same email this time that said I had to. After again talking to an IPO rep and broker (who insisted I was a part of the affinity program and had no idea what I meant when I said I received the offer directly from an employee) I got to talk to the directed shares person and found out I was all set.
He also let me know that that the stock wouldn't be in the account till late at night due to additional SEC filings they had had to make after the stock was repriced. From the sounds of it, Etrade was caught offguard and had a lot of scrambling to do.
In the end, I got my shares and have sold some and am holding the rest. I'd also like to say that I don't think Etrade is to blame for everything that went on and the people I talked to were always very polite and helpful, albeit a bit confused!
Can someone please tell me how the people who recieved The Letter were choosen? AFAIK, it looks like it was just Friends and Family of people working for Red Hat that got the chance to buy stock first... "800,000 IPO shares for "directors, officers, employees and friends of Red Hat," the filing said." (Hmm... Isn't this close to "insider trading?" Well... Sure wish I would have got "The Letter" ;-)
My friend is -not- a member of the open source community. He is an elementry school teacher. (How's that for altruistic you ass.) He mereley hoped to make some money off of the stock option. -I- being a believer in Linux, and the ideas it represents, had told him that this was a great oppurtunity. That even if the stock didn't do great he would be supporting a worthy cause. He feels screwed by E-trade (not a member of the open source community I might remind you). So before you jump on -my- back for -my- greed keep in mind that -I- did NOT participate in the IPO and had very little desire to do so. I'm just a software engineering intern working for a small company in southern california. You can hide behind your AC all you want, but the name fits, and you're wearing it.
Teach a man to dish and he will gossip for life.
Do you think that you could possibly
remove your distribution war stupidity
from your your idiotic conjecture.
Old truckers never die, they just get a new peterbilt
Hello?
Now we know why E*Trade has a form to fill in to make sure you have some experience before getting in on this.
Almost *all* IPOs get repriced outside of their range, either above or below.
Maybe E*Trade did a bad job communicating some information, but they are used to dealing with people who know a stock from a hole in the wall.
Geesh.
Do you even know anything about perl? -- AC Replying to Tom Christiansen post.
Seriously, I went through the same thing here. It just started earlier. I applied for the etrade account, and a day later got email inviting me to open an etrade account. Out of order. I thought that was odd. Then when I went to check the account, it was there. Then later it wasn't. Hmm, did I open two accounts by accident? Don't think so. I'm not that loopy. So I get my conditional offer in. Later I go to check up on it by web, following the instructions on the FAQ. But the instructions are not followable, no such links exist. I spend an hour clicking on everything before giving up & phoning in.
Then some more out of order stuff: aug 10th noon EST message states the expected price range has increased to 12-14. So I call. Later in the day, the message is gone. Then that night 10pm est a new message: 'if it reprices above $12 ...' I'm complaing to my wife at this point about how disorganized etrade is. I have a 3 year old, I know what disorganized is ...
Then of course, trading opens aug 11, and more confusion ensues. Is this really normal? My old college room mate is an IPO lawyer, I'm calling him to ask if this is normal ...
Well, as you can see from the cNet story (oh, one coming up on Salon, and you might want to check the WSJournal), I'm not very pleased with E*TRADE.
... tick ... tick
I will say that major kudos should go to Red Hat for sticking up for you guys and to the SEC for proving that our taxes and fees can help the little guys out there, not just the big boys.
Will in Seattle
day 2: 0 shares, $72/share
Will in Seattle
Today RHAT has been trading at about $75. Multiply that by 66.8 million shares, and my friend, that's FIVE THOUSAND MILLION DOLLARS. A cool 5 Billion to you Americans.
When I see a new slashbox, that let's people check their Red Hat stock, I'm out of here. Didel, who couldn't log in, because the system is fucked.
"by Anonymous Coward" is definitely right here.
Cripes, more Red Hat bad mouthing. Why don't you put up a real name or shut up.
Red Hat user, and proud of it.
Right now RHAT is a concept stock, based on the potential of Linux to do well. What's not so obvious is how RedHat is going to cash in on Linux's growth to the extent required to justify that $5B market cap. It may stay up there for a while, but at *some* point, fundamentals and reality will come to bear....
Let's be very generous and say that RHAT deserves a huge 100 P/E, so that $5B cap. would require $50M of earnings. So even at a huge 50% margin, they need at least $100M in sales...
But their last year's sales were only $10M, so even sales were to increase by 100% a year for the next 3 years, that would only take them to $80M - in three years time.
So it would appear that *todays* RHAT price *already* reflects an assumed 3 years of sales doubling, a fat 50% margin, and an extrememly generous 100 P/E ratio.... seems to me there's not much room for ANYTHING to go wrong, and no upside even if EVERYTHING goes right...
Caveat emptor.
I agree: whatever Red Hat does with it's newfound wealth will help the open source community. What greater benefit could we ask than an open source windows emulator? Certainly the task in daunting. Even after years of development, we can be sure M$ will change their code to make it incompatable with whatever the open source community comes up with.r on/ addresses just this question.)
However, Red Hat now has the money and can certainly get the talent to do it. (What is the ratio of applications to jobs at Red Hat? More than 100 to 1?) The project would have to be supported indefinatly, and that's exactly why it will have to be open source. Any propriatary software to compete with M$ won't sell - and for good reason: if the competetor to M$ goes out of business, the software will die with them. And we can all imagine what M$ would do to such a potential competitor.
So why should Red Hat do it? In the short term, the media interest it would create would benefit the stock further. In the long term, the financial gains from sales of books, support contracts, etc. would be enormous. (The recent paper by E.S. Raymond, The Magic Cauldron
http://www.tuxedo.org/~esr/writings/magic-cauld
I think Red Hat is the first of many Linux distributions which will have this unique opportunity. My question is only: are they the ones who will actually do it? If so, I think I'll check into their stock, whatever it's current value - the potential is virtually unlimited.
a war on terrorism? How can we end a war on a method?
How many shares did people ask for, and how many did you get? Informal surveys seem to indicate that 400 was the de facto limit for Open Source invitees, did anyone get 500 or more? Was your account fully funded? Incidentally 400 shares if the reserved amount was 800k for Open Source invitees (which seems unlikely) means about 1600-400 invitees participated. That could be lower if part of the 800,000 was taken by Friends and Family and Employees. Maybe this could make a slashbox poll.
I'm gonna get flamed to a crisp for this, but what the hell...
1) Red Hat closed today at 72 5/8 on a volume of 15,290,300 shares. It closed yesterday at 52 and change, on a volume of something like 13 million.
The company has a brand-spankin-new market cap of 4.854 BILLION dollars.
2) Red Hat experienced a loss in its last fiscal year on sales of ONLY 2.8 million dollars.
3) Only 6 million shares were offered during the IPO.
The inevitable conclusion is that RH is absurdly overvalued right now. The six million shares outstanding have traded hands about 4.5 times now (on average), and the stock price isn't even remotely reflective of the actual value of the company. This stock looks like a target for a well-timed shorting spree...
aperantly, I think Red hat just wanted to do the right thing, and earn some good karma with the open source movment, but E*trade really screwed up. What really sucks is that Red Hat didn't do anything wrong at all (exsept for make the terms that E*trade was going to opperate on a little clearer)
"Subtle mind control? Why do all these HTML buttons say 'Submit' ?"
ReadThe ReflectionEngine, a cyberpunk style n
Feh. I just submitted this on the main form when Roblimo's post shows up on the page.
The LA Times has a nice summary article titled Red Hat's IPO Battles Timing, Microsoft detailing the positives, flaws, and hurt feelings of the Red Hat, Inc. IPO. Perhaps the most interesting line reads, 'Analysts worry that this could destroy the cooperative mood that has been a feature of the Linux community and a key reason for its success.'
Any comments on this?
--
Rob Carlson
I think those of you who were lucky enought to get into the preipo will be very lucky. Even my brother who has never ran linux is going to try to buy some RedHat stock on the ipo.
How could I have been let into the redhat pre ipo?
I'm thankful for the positive response to the RHAT IPO. Many other tech stocks have caught some of the positive spin and are up from yesterday.
I called my stock broker (yes I actually have one) before the market open and asked to buy as soon as it opens and before it hits 60.
Well he had about 10 minutes to do so and I'm still waiting to hear from him if he did.
I'm expecting that it will come back down to 40 (But not betting money on it
If Red Hat uses this new source of revenue to good use, I think they have a potential of being a $120 stock. But if the don't use it well, then they are going to have problems and that will be the time to sell.
God I wish I got "The Letter", I may have even qualified to buy!
Steven Rostedt
-- Nevermind
Basically my story is the same as other affinity group folks. I too got completely contridictary information from e*trade. I too got the "reconfirm" insanity, but I did get phone calls from e*trade telling me to get in there and reconfirm--little good that it did at the time. I too got the "no shares allocated" message. But in each case, when it finally dawned on me to say "BUT I'm in the AFFINITY GROUP!" things changed for the better.
Now I have almost as many shares as I requested and I'm not disappointed. (of course what I got was small potatoes, but I had expected nothing and I appreciate Red Hat's thinking of me).
Now will VA do something similar?
Certified Black Helicopter Pilot *** Unwitting Dupe of One World Gov'ment
I got up at 7am PST (early for me, on flex time) to check to see if my "affinity shares" were allocated. Instead I see, on the ETRADE IPO center, the message about confirmation of interest. By a fluke, I get in and reconfirm in that short time window.
A little later, I also get the email saying that I should go and reconfirm by sending mail to ETRADE through their Account Services, and I take care of that as well.
A few hours later, I get an alert in my ETRADE account saying no allocation. Big disappointment, but I wasn't guaranteed anything from the beginning. I could live with that.
Then, things started getting interesting. Two hours after the no allocation message, I get a call from ETRADE asking me if I had reconfirmed, and if not to do so. At this point I thought that some person in ETRADE had a list of people to call for confirmation of interest, and was finishing the list, even though some of those people had already been passed over for allocation. So I asked her, and she said the allocation for affinity shares hadn't happened yet, and sounded confused about by "no allocation message." My hopes started to rise, but at that point, I thought the odds looked bad.
About eight PST last night, one of my coworkers, also an affinity shares type, got an ETRADE alert indicating that he needs to reconfirm via mail (he reconfirmed via the web form for non-affinity members, and had thought that sufficient).
I looked at my account, and shazam!, there was my allocation of shares at the IPO price!
In the end ETRADE came through, and the Red Hat price justifies the confusion along the way. However, ETRADE sure could have done a better job communicating what was going on. Had I decided to empty my account of cash after receiving the first bogus "no allocation" message, or to invest it elsewhere, I most likely would have received no allocation. (Although, given the way the ETRADE support lines have treated me so far, I imagine that they'd have fixed the mistake later). If Red Hat's price had plunged or skyrocketed, and I wouldn't have been able to make a decision about selling.
All in all, I'm happy with the way things worked out. But better communiction would have been nice.
The Red-Hag IPO is nothing more than the typical "Let's undervalue the offering price to get a huge percentage gain on the first day of trading" baloney. By leaving a little money on the table by not starting out higher, they create false brand in the minds of Wall Street. This was nothing more than an attempt to out-do the Netscape IPO. The way this IPO was pre-hyped borders on illegal and I have no doubt that the SEC will be investigating. This goes to show that RedHat is nothing more than your run of the mill corporation pulling the same BS any other company trying to ride the "Next Big Thing" would do. SuSE RULZ!!!
The real gains--dwarfing even X number shares one might have bought--will come from the soaring demand for Linux skills. Sure, we all wish we could have invested tons in RedHat as "privileged investors", but in the years to come, the demand (and high fees) for Windows-to-Linux migration projects are going to be fantastic. I for one am pledging to myself to give back a bit, and donate a bit every year to the Free Software Foundation--without RMS's stubborn vision over the years, none of this would be happening today. Anyway, there's going to be plenty of lucre for everyone who is deeply into Linux. I just hope we hold onto our ideals as the greenbacks roll in. I think we'll be up to that challenge, though.
Moderators, please moderate this thread out of sight. I corrected a typo in it, and resubmitted it (the next top-level message). I'd thought that since the browser hadn't returned from the submission after a long timeout, that the typo'd message didn't go through. I guess /. was just lagged.
Man, it's been hard to get on slashdot today. I assume everyone wants to know about this story :-)
"Your friend" is a jerk.
This idiotic propensity to get a lawyer over something like this is NOT what the linux community is about.
If you or "your friend" were REALLY open souce enthusiasts you wouldn't be so fixated on MONEY.
Currently, according to Yahoo! RHAT is trading at
74 3/8 and MSFT is at 83. MSFT has been slowly slipping since this morning (opened at 84 3/16) while RHAT has exploded.
What will the financial pundits say when RHAT closes higher than MSFT? I feel the tide is turning, mon freres'.
John
"Classic UFO's
Red Hat's strengths are its marketing and branding in the eyes of the public. From this it leverages support agreements and co-branding deals with S/W companies. But, unlike MSFT, it neither controls nor forces Linux to comply. We can ignore Red Hat desires as we wish, and a better code alternative can still win in Open Source competition, although if Red Hat does not support it, we have a higher bar of proof that the code is "better" than the Red Hat distribution.
...
In the Linux sphere, Red Hat is associated with Linux in the eyes of the public, but to us it is merely one popular choice. Synergistically, it is a "safe bet" for the PHB to choose Red Hat brand, as they know they can get support and their s/w will work. Plus, added bonus, they get source code!
Because the monied classes now have respect for Linux, this contributes to the dissolution of the MSFT monopoly on the mid-range/server/workstation side, while eating into the virtual dominance of the desktop. Linux is hot and a desireable skill, while MSFT is not and its stock options less attractive. So, we win mindshare
Will in Seattle
So what in the world is that? Well, okay, the first day went good but you're still not Microsoft so you are doomed? Come on, it was successful. Say so and move on. Don't blabber about your little nephew Horace's IPO and say that that proves anything.
-Brent
I just wanted to post that I had a good experience (well, at least not a bad one).
:^)
I had put in for some shares when I got 'the letter', but since I wasn't sure if that was going to work I also put in a bid when Etrade opened it up to the public.
When I got up Wednesday morning and checked my account I saw the notice that the price may change and I may have to reconfirm. Just to be safe, I called (this was 7am PST/10 EST) and told a broker that $14 was OK with me.
Later in the afternoon I got a phone message that I should call and reconfirm, so I did (again), and the guy I talked to said I was OK, he didn't know why I had gotten the message. Then I got a notificaion saying that I did not get _any_ shares. I was kind of bummed, but I hadn't really gotten my hopes up anyway.
Late last night (7pm PST/10 EST) I got _another_ call saying that the price was going to be $14 and I should call and reconfirm. I ignored it.
This morning when I checked my account I found out that I _did_ get some shares - not as many as I had asked for, but I was happy none-the-less. So my current guess is that the "no shares" message was from one of the two bids, and I got some shares by chance from the other. I don't know which was which, but I guess that's not important.
So it was a bit confusing, but it worked out OK in the end.
I'm sorry for those who tried to get in but didn't. E*trade could have handled that whole situation better, but I wanted to post that it worked for me so that we don't think that _everyone_ got screwed over and nobody got anything.
Check the market cap- that's the actual value of the stock. MSFT is 100x that of RH, and both are severely inflated.
Eric
"Seven Deadly Sins? I thought it was a to-do list!"