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Red Hat Buying Cygnus?

Ok guys, this is purely a rumor, but its one that I've heard from several points on the globe so I'm gonna share it: Vulture Capitalist writes "I just got out of a meeting with Matthew Szulick and it appears as though Red Hat has inked a deal to buy Cygnus. In related news- we also understand that some people at Red Hat were so upset with the acquisition and it's corporate implications that they have decided to resign from their Sr. management (founding) positions. After the failed acquisition attempts with both Linuxcare and TurboLinux- this should prove to be a very interesting deal. I'm personally looking forward to the annual report! " Again, none of this is any more than rumor, but I've caught wind of it from several spots so I figure its worth sharing. What's interesting is that Cygnus has more employees then Red Hat, and actually generates more revenue.

39 of 200 comments (clear)

  1. Re:What corporate implications? by rde · · Score: 2

    s their going to be some change in the attitude toward open-source?
    A better question might be 'how will it affect red hat linux?' I see nothing fundamentally wrong with red hat continuing its dedication to open source through linux, and operating in a more conventional, proprietary environment for other software, at least in the short term. Obviously I'd like to see everything go open source, but I'm not going to jump on the anti-red-hat bandwagon if they don't do it immediately.

  2. If this is true... by cswiii · · Score: 2

    ...how long has the deal been in the works?

    I ask, because many of you probably remember the "name the company" contest Cygnus had a while back. It was rumoured that they wanted to change it because of 1.) a lower neccessity to emphasize "GNU" (cyGNUs), and 2.) because they'd been considering an IPO, whereas there's a Cygnus Pharmaceuticals already.

    This said, a while back, the outcome of the contest -- an indefinite delay -- was announced. In this light, such seems fairly interesting.

    Then again, I just might have seen one too many X-Files episodes. But I do find the resignation of senior management interesting as well.

  3. What else do you do with an insane market cap ? by Forge · · Score: 2

    RedHat's Market cap is at around $7 Billion now. It has nothing resembling prospects of earning that kind of money any time soon so the logical thing to do is buy up some other companies that make a lot of money but have small or none existent market caps.

    The greatest barrier is that a clash of cultures is dangerous and buying up something that's practically dead is almost suicidal.

    In other words, Corel is risky. SCO is bad. Cignus is good. Linuxcare would do wonders for RedHat's reputation :). Turbo Linux is good.

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    --= Isn't it surprising how badly I spell ?
    1. Re:What else do you do with an insane market cap ? by copito · · Score: 2

      Mergers these days are typically stock swap deals. The purchasing company issues new stock and gives a certain number of shares to each stockholder of the purchased company. Deals can also be all cash or some combination of cash and stock. You are right in that this process is dilutive in that it means there is more stock issued. The main point investors look for, however, is whether earnings will be diluted, i.e. whether the P.E. ratio of the combined company will be smaller or greater than the expected P.E. ratio of the purchasing company alone. Of course in the topsy-turvy world of tech startups, earnings are less important than growth, so investors will be looking at how the combined company will grow in comparison to Redhat alone. Incidentally, most mergers are not as good as the investors expected them to be.

      As for the money generated by the IPO, indeed IPO companies do use IPOs to generate inexpensive capital, but the main concern in most IPOs is to create a market into which the founders and venture capitalists can later sell their stock. In a typical IPO plan, venture capitalists are looking for a 10x return on invested capital. To that end, the venture capitalists, founders, and private placement retain about 90% ownership and invest around 10% of the total capital of the company, whereas the public invests 90% of the capital and gets 10% of the ownership. A pretty nice deal huh?




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      "L'IT c'est moi!"
  4. Makes sense. by Anonymous Coward · · Score: 4

    Red Hat and Cygnus are in vertical, software-only markets, so a buyout or merge makes sense. Cygnus' major markets are the embedded space, GCC/tools customizations and GCC development. Red Hat is doing all the software work orthogonal to that: kernel development and packaging/maintainance/support. It's ridiculous to suggest that this could create any kind of monopoly, both companies are writing software under the GPL - if users are unsatisfied with any product they can take it and go a different path. Just like Mandrake does. If this deal proves to be true then there will be interesting times ahead!

  5. Good News for every distrib. by CodeRed · · Score: 2

    RedHat has more money then any distrib, and
    all it's work is GPL'd, so this is no problem
    for Debian, SuSe, etc.

    It would actually bring more developers into
    RedHat, and just imagine what is in store.

    They have done nothing against the community,
    yet every one says "Next MS".

    Has anyone compared there market sizes?!?!?

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    CodeRed, the lower user #. No relation to SirCam.
  6. A good call by The+G · · Score: 2

    Cygnus has been in trouble recently -- the outcome oftheir "name the company" contest suggests that they weren't financially strong enough to IPO. Getting acquired makes good sense there.

    RedHat, by contrast, has the advantage of a delusionally high market cap that is buying power today but could be gone the moment the market comes to its senses. Making an acquisition makes good sense.

    What it does signal is an agressive position for RedHat -- Cygnus isn't a Linux company, their expertise is more general Un*x and IDE/compatibility stuff. That jives with RedHat trying to push Linux as the Un*x of the future -- they need to build or buy more expertise in that direction.

    In my view -- this would be good for RedHat, good for Cyngus, good for Linux, and probably seriously bad news for all the other Unices (eunuchs?) on the block.
    --G

  7. This is sad by hanwen · · Score: 2
    For those who don't know, cygnus maintains most of the GNU development tools (GCC, GDB, binutils, etc.). It is a firm that has been making money off free software for ten years, mostly by porting GNU tools to embedded systems.

    I think this is a sad sign: if true, with this deal, Red Hat has shown that they are not confident about their own business strategy. Now they compensate for this by buying up other (profitable) companies.

    I don't see what the benefit is for the public.

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    Han-Wen Nienhuys -- LilyPond

    1. Re:This is sad by Zoltar · · Score: 2

      IIRC part of the business plan that RedHat laid out for their IPO stated that they planned on purchasing other tech companies. There is nothing evil or inherintly wrong with that. In fact it make good sense.

      What doesn't make sense to me is the reactionary response that RedHat by virtue of operating as a business is evil, or the next Microsoft. This is the real world we are dealing with here, purchasing other companies is not evil unless they are using unfair or illegal means to force the purchase, which seems unlikely.

      What is sad here is the unfounded fear and paranoia that seems to run rampant...

    2. Re:This is sad by JordanH · · Score: 2
      • Red Hat has shown that they are not confident about their own business strategy...

      Change happens.

      It seems Cygnus wasn't confident about their business strategy a few years back when they went from a Free Software support operation to selling packaged software that was complementary to Free Software (IDEs and the like).

      I wonder if this means the new combined company will release everything GPL'd or if RedHat will start producing and selling for-fee packages? Or will Cygnus be run at arms length with no changes to either organizations? If this is the case, it's hard to see why RedHat's making this buy.

      One HUGE potential synergy I see between Cygnus and a distro maker would be for Cygnus to polish up Cygwin (their Unix porting layer for NT based on Free Software) and have a distro package that has the Cygwin tools thrown in (probably on a separate CD). If you could add-in a Free Software X-Windows for NT then this could be viewed as a Linux compatibility package for NT, allowing interoperability and porting support between the two environments.

      Let's face it, most organizations are not going to throw out all their Windows and go to Linux in the short term, but rather add in some Linux where it makes sense. Environments like Cygwin (if made mature) could be a boon to these customers allowing them to produce programs in Linux that could be easily ported to their Windows machines.

  8. Re:Hmmmm by PD · · Score: 2

    No, RedHat will not become a monopoly. Their core system cannot be owned and controlled by them. Do you suppose that you could buy a copy of NT, make some changes, resell it, and compete against Microsoft?

    That's what Mandrake did, as well as many others. I'm thinking of two guys still in high school getting rave reviews for their distro. The mere fact that these guys can do what they are doing shows that Red Hat will never enjoy monopoly power. Remember, monopoly power doesn't necessarily mean market share. Red Hat will get to be a big company, but never a monopoly.

  9. Re:What Does Cygnus Make? by Gleef · · Score: 4

    Cygnus makes:
    * The GNUPro development toolkit
    * ECOS, an embedded operating system (designed to work with GNUPro)
    * The Cygwin Posix-compatibilty environment for Windows
    * Other development tools (eg. Code Fusion, Source Navigator)

    AFAIK, their real revenue stream is in consulting, particularly for embedded systems developers. Check out their website: http://www.cygnus.com.

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  10. Re:Disappointed that CYG-WIN v 1.0 = $99 by Liquid+Plumber · · Score: 2

    Um, I think that Cygwin 1.0 was actually just the 20.1 beta packaged together in a CD with a bunch of other stuff. It's still available online as free software, because it was all licensed under the GPL. Don't worry, it's still free.

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    // The Liquid Plumber - www.stf.org/~drano/ // In /dev/null, no one can hear you st
  11. And also by Gleef · · Score: 2

    They are very strong supporters of many Free Software development projects, most notably gcc, GNOME and Docbook.

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  12. Who's Cygnus: an off-the cuff history. by Amphigory · · Score: 5

    I've seen a lot of posts saying "Who's cygnus?" While I don't know the company especially well, I thought I'd make a quick post of some of what I do know.

    Cygnus has been around since the dawn of time. err.. Well, the late 80's anyway. Basically, they were founded to provide commercial support for the GNU project. Their biggest area of involvement has been in the compilers.

    As nearly as I can tell, Cygnus makes most of their money from consulting, support contract for GNU stuff, and porting GCC to processor platforms for various vendors (e.g. Intel).

    EGCS is a cygnus project. I think glibc is as well. They have produced a version of the GNU development suite called "GNUPro" which includes some moderately enhanced stuff. They have produced their own Real Time operating system called Ecos (if I remember right). They have produced a complete port of all the GNU stuff to Windows called "Cyg-Win" which they sell for $99.

    When Linux came out, they blew it off. Now look at 'em ;)

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    -- Slashdot sucks.
    1. Re:Who's Cygnus: an off-the cuff history. by Foogle · · Score: 2
      Now look at 'em?

      First of all, Cygnus is the most active developer of everyone's favorite compiler, so don't say that they blew Linux off -- they helped write the damn compiler for it. What did you expect them to do? Release their own distro? They're a compiler company, and they aren't tied to any one platform. I think they're doing a fine job.

      Also: Cygwin is freely downloadable, you don't have to pay $99 for it.

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      "You can't shake the Devil's hand and say you're only kidding."

    2. Re:Who's Cygnus: an off-the cuff history. by Ed+Avis · · Score: 2
      cygwin is still quite alive and well and it is quite free. gnupro is the package for sale.

      Yes, Cygwin is free, but it costs $99. See the sales page if you don't believe me. The last beta (b20.1) is downloadable from Cygnus's site, but 1.0 isn't. Since it is free, though, there's nothing to stop anyone from buying it and then selling copies la Cheap Bytes, or putting it on an FTP site.

      BTW GNUPro is free as well - or at least most of it, there is some proprietary graphical debugger stuff.

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      -- Ed Avis ed@membled.com
  13. Why this could be a really good thing. by Amphigory · · Score: 5

    Consider that, without fail, every Linux distro and application, even the kernel, uses gcc. And Cygnus are the acknowledged world experts on gcc. So, if improvements can be made to gcc that make it 10% faster, then suddenly Linux is 10% faster!

    On another note, one of the big things Linux needs to do is improve the quality and availability of "easy" development tools. Cygnus has a background in that area as well (although they are not necessarily the best). I know they've already done some work on precompiled headers and so forth.

    Given Redhat's record of contributing back to the community, I think this could be a really good thing for Linux as a whole.

    Go Redhat!

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    -- Slashdot sucks.
  14. Investors beware: CYGN != Cygnus software by cyberdonny · · Score: 2
    The following post appeared on the CYGN investment board at Yahoo:

    Check out this rumor on Slashdot
    by: cyguy2000

    http://slashdot.org/article.pl?sid=99/11/10/0823 222

    No movement in CYGN's stock though, except for
    the higher than average volume yesterday.

    Beware, CYGN is not the Cygnus we're talking about here; CYGN does pharmaceuticals. Don't be taken in. In the meantime, could somebody please provide the real stock symbol for Cygnus software, or confirm that it isn't publically traded.

    1. Re:Investors beware: CYGN != Cygnus software by hadron · · Score: 2

      It isn't publically traded.

  15. Misunderstood? by mosch · · Score: 2

    I believe what was meant was 'if they could suddenly make the compiler generate code which ran 10% faster, then Linux would be 10% faster'.

    As for the effect of RHAT buying Cygnus, the one thing that would be a little more likely is that while profiling an inefficient portion of code, it would now be feasible to work directly with the compiler team to generate faster code.

    As for IDE's, I prefer vim :-)

  16. GCC IS developed by cygnus! by BacOs · · Score: 2

    In April 1999, the egcs steering committee was appointed by the FSF as the official GNU maintainer for GCC. At that time GCC was renamed from the "GNU C Compiler" to the "GNU Compiler Collection". From http://www.gnu.org/software/gcc/gcc.html

  17. Re:Hmmmm by bmetzler · · Score: 2
    Do we have the makings of the next monopoly?

    Will Red Hat start using anti-competitive and illegal practices to force people to sell/bundle/preload/use their products?

    Probably not.

    -Brent
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  18. Re:Hmmmm by Amphigory · · Score: 3
    Quoth the anonymous Coward:
    Name a free compiler other than gcc.
    One word:
    lcc
    Anybody out there ever tried it? I haven't, it doesn't appear to be on a par with GCC, but the point is that it /does/ exist.
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    -- Slashdot sucks.
  19. Linux needs apps, apps require tools by davie · · Score: 4

    This is a no-brainer. You're Red Hat, you've just been infused with tons of capital, you want to do things to improve the market penetration of Linux. How better to do this than to buy up the key Linux development tools vendor?

    How many of you who are worried that RH are trying to become the Microsoft of Linux have considered what might happen if Borland repeat their 1980s DOS compiler coup on Linux? Before Borland's Turbo Pascal came along, a decent DOS compiler couldn't be had for less than several hundred to one thousand dollars; TP rolled out at ~$75 a pop, took the compiler market by storm. Suddenly, everybody was using TP to develop DOS apps. What if Borland's Linux compilers took the Linux market by storm and left Cygnus in the dust? How many of you would be complaining that RH weren't doing anything to preserve Cygnus and leaving us at the mercy of Borland?

    Like it or not, the future of Linux involves NASDAQ, venture caps, and lots and lots of money. Technologies like "egcs" and embedded development tools that are important to the future of Linux will be acquired. What we should be asking ourselves is not, "Is it a good thing that someone may buy out Cygnus?" but "Which company would we prefer to take the reins at Cygnus? Turbo? Caldera? Red Hat? Microsoft?" I'd prefer that Red Hat end up with Cygnus since they've demonstrated that they are dedicated to the GNU concept. Some other vendors seem all too willing to market closed add-ons to Linux and would probably hurt Linux if they had control of Cygnus.

    Right now, the Linux development tools space is where it's at, and this would seem like a wise move on Red Hat's part.

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    slashdot broke my sig
  20. I find this rumor questionable... by wowbagger · · Score: 2
    I find this rumor questionable, not because I cannot see RedHat buying Cygnus, but because:
    1. Cygnus is used by other companies, too (Wind River Systems for one). If RedHat bought Cygnus, what would WRS do?
    2. Why would anyone at RedHat have a problem with merging with Cygnus? I simply cannot see anyone getting their back up over this. Anyone have a good reason somebody would resign over this? Until I see one, that makes that part of the rumor suspect.

    This hypothesis just doesn't seem to fit the facts.

    P.S. If you follow the link to WRS above, either disable cookies, or disable "Warn me before accepting cookies". WRS's server is very cookie-happy.
    1. Re:I find this rumor questionable... by Ed+Avis · · Score: 2
      If RedHat bought Cygnus, what would WRS do?

      Maintain the compilers themselves, or pay somebody else to do it!

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      -- Ed Avis ed@membled.com
    2. Re:I find this rumor questionable... by JordanH · · Score: 2
      • 1. Cygnus is used by other companies, too (Wind River Systems for one). If RedHat bought Cygnus, what would WRS do?

      RedHat doesn't really have an offering in the same space as WRS. I don't see why they wouldn't continue to support WRS. For that matter, RedHat would probably be happy to support all the commercial gcc users whether they compete with their Linux distribution or not. At this point, I think RedHat would love to start showing a profit.

      • 2. Why would anyone at RedHat have a problem with merging with Cygnus? I simply cannot see anyone getting their back up over this. Anyone have a good reason somebody would resign over this? Until I see one, that makes that part of the rumor suspect.

      It may be that RedHat is pushing out some of the senior people in favor of senior people from Cygnus, who have demonstrated how to make money on this Open Source stuff. Or, it could be that the proposed new combined company will continue to sell the Cygnus for-fee licensed products and some of the senior people at RedHat find this intolerable.

  21. Re:? by kijiki · · Score: 2

    PICO??? good god. Use teco like us real men. EMACS AND VI SUCK, TECO FOREVER!!! (For those newbies who just "discovered" unix thanks to linux, teco is what inspired edlin. before such blasphemous tools like vi or emacs.)

  22. Buying Cygnus is good. Now they need to buy VMWare by Nassah+The+Zerg! · · Score: 2

    Ok,

    If it's true, good for them, they need apps. And, I think that buying key companies that make Linux cool is good.

    On the other hand, I would have loved to see them buy VMWare and open source whatever they can in it!

    Of course, these bought companies should be independent divisions of redhat that keep their name and employees etc....

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    The kernel needs a Gtk/Gnome-based post-install device configuration tools "a la" make xconfig. (Better sig coming soon
  23. Cygnus is mostly selling support for free software by Per+Abrahamsen · · Score: 2

    They have a couple of proprietary products, but I doubt they make them much money.

    So I don't think this would affect Red Hat much. Maybe they would make the proprietary Cygnus products free software, that would not cost them much.

  24. Re:What Does Cygnus Make? by Per+Abrahamsen · · Score: 2

    They maintain binutils and gdb for the FSF. They are the single largest contributer to gcc, and the head of the gcc team is a Cygnus employee.

    Their main revenue comes from selling support for gcc (and the GNU tools) to various makers of embedded devices, including ports to new hardware.

    They have started selling boxed packages, such as GnuPRO, CodeFusion, and Cygwin. GnuPRO and Cygwin are just packeded versions of free tools, CodeFusion is proprietary.

  25. The Cygnus founder describes the company... by Paul+Crowley · · Score: 2

    You can read all about Cygnus and its free software business plan from Michael Tiemann's chapter of "Open Sources: Voices from the Open Source Revolution" (aka The Book that Slashdot Made).
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  26. Cygwin is still free by Per+Abrahamsen · · Score: 2

    The only non-free software on the CD is the install program. This means that you can install it on as many platforms you want, and that you can put all the software (except the install program) on ftp if that is what you want. Free speach, not free beer.

    It is *not* just b20.1, but a later version.

  27. Re:is that the same reason by Ed+Avis · · Score: 2

    It's just that the FSF are legally cautious and don't want to face copyright infringement lawsuits later on. When you assign copyright to them, they promise to make the code available under a free licence (there is a form somewhere, I don't know where though).

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    -- Ed Avis ed@membled.com
  28. Future of Linux lies with US not NASDAQ by A+nonymous+Coward · · Score: 2

    What a sorry bunch of FUD!

    Linux made it to the big tent without NASDAQ and will continue regardless of NASDAQ. It shows an atrocious misunderstanding of free source software to say otherwise. It simply can't be hijacked.

    Suppose Borkland did release a killer IDE for Linux. Further suppose Borkland did intentionally make it incompatible with everything that exists now. How many free source developers would actually release code that *required* such a beast? Can you imagine a distribution that came with sources (as required by the GPL) yet couldn't be built except with the Borkland IDE?

    You have got to be sleeping poorly to come up with any such scenario.

    Like it or not, free source software CANNOT be hijacked.

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    1. Re:Future of Linux lies with US not NASDAQ by davie · · Score: 2

      Take a deep breath and read my post again. I stated that "the future of Linux involves..." I did not say that the future of Linux is "dependent upon..." NASDAQ, etc. I did not, as you put it, "say otherwise."

      Can you imagine a distribution that came with sources (as required by the GPL) yet couldn't be built except with the Borkland IDE?

      You have got to be sleeping poorly to come up with any such scenario.

      You came up with this scenario, not I. If anything, Borland have hinted that their compiler products will be very compatible, and why should't they be? There's no compelling reason I can think of, strategic or otherwise, for Borland to make their products incompatible or use non-standard switches, etc.

      Maybe you're not old enough to remember the Turbo Pascal era. I am. It was an amazing time for folks who wanted to write their own software, and I think Borland can be credited with making PC software development a real cottage industry. Borland have proven that they can do compilers and can (occasionally) figure out where the marketplace is headed. Look at the Borland developer survey if you want to find out what developers are telling Borland about what they'd like them to do with development tools on Linux. If Borland are still as sharp as they used to be, they'll shrink wrap a drop-in replacement for egcs that (at least according to early benchmark reports) may very well produce tighter, faster code. If they give the Linux user a choice between a Free compiler that produces good code, and a $125.00 compiler that produces much smaller and faster code and requires no tweaking to build the kernel and/or projects packaged for autoconf, I think they may just repeat their compiler revolution.

      Whence cometh the "hijacking" rhetoric? Who is hijacking whom? I see one company that is in business to make money, purportedly considering the acquisition of another company that is in business to make money.

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      slashdot broke my sig
  29. Re:Greed and quality by Foogle · · Score: 2
    On top of the reply above this, I'd point out that a lot of new Microsoft programs are incredibly stable -- more so than a lot of OSS programs I know of.

    Outlook 2000 is a very streamlined program. Redesigned from the ground up, I can't remember ever having it crash on me.

    Visual Studio 6.0 is another great one. This is probably my favorite Windows program (aside from my DVD player). It doesn't crash and, although KDevelop is quite kickass, there really isn't any IDE out there as good as VS6.

    So I guess what I'm saying is that Microsoft's applications are actually pretty good. It's their operating systems the bite.

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    "You can't shake the Devil's hand and say you're only kidding."

  30. Re:Hmmmm by Chris+Siegler · · Score: 2

    Anybody out there ever tried it? I haven't, it doesn't appear to be on a par with GCC, but the point is that it /does/ exist.
    Here is what John Carmack posted to the lcc-request mailing list about LCC
    "I had seen a reference to LCC in comp.compilers, so I thought I would check it out.... Wow. An 11k line ansi compiler. I am impressed. The documentation and example code was clearly structured, and I got everything generating proper code in about three days. A couple more days of bug chasing and optimizing, and I have a damn good tool. This has saved me SO much time (it was fun, too). If the authors are at all into PC games, they can have a couple free copies with my compliments!"
    That was back in 1994, and this more recently from his .plan file
    The tools necessary for building mods will all be freely available: a modified version of LCC and a new program called q3asm. LCC is a wonderful project -- a cross platform, cross compiling ANSI C compiler done in under 20K lines of code. Anyone interested in compilers should pick up a copy of "A retargetable C compiler: design and implementation" by Fraser and Hanson.
    I've got the book. It's expensive at $70, but I think it's worth it if you want to understand how real compilers work as opposed to the toy compilers most classes and books use to teach compiler theory. It's only weakness is that it only explains the theory necessary to understand the code. But there are other books for that.