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Red Hat Stock Splitting
zerOnIne writes "ZDII has a story detailing that Red Hat plans to split their stock on a 2-for-1 basis, sometime about January 7. " The story also talks about Red Hat filing a 3.6 million dollar loss on a revenue of 5.4 million. Sales were up 24 percent from this time last year.
Oracle is splitting as well.
I was at CompUSA this weekend and actually saw people purchasing both corel and redhat. Cool!!
Christ, I knew I should have gotten in when I could have. I know a guy who got in at $80, he'll be raking in the cash now... [Guess who feels stupid now!!!]
First post?
24% growth doesn't seem like fast enough growth to justify the way their stock price has grown.
First, make it work, then make it right, then make it fast, then, make it bloated!
I'll go ahead and take away my +1 bonus because i'm about to say somehting that's not nice about redhat. Well, not redhat... But just because everyone here owns Redhat stock, that doesn't make this a newsworthy event... Stocks split all the time. It changes nothing. You get twice as many shares but they're all now worth 1/2 as much. They do this to "make the stock more accessible to the smaller investors" which means nothing because anyone can buy a single share of the stock... and if you can't squirrel away $200 for a single share of the stock, you shouldn't be buying up stocks anyways... Show your support for the company by buying their products instead.
They didn't make that much money. 5.4 million is a piddling amount. I had no idea they were that small. I'd say they will need to continue "losing" for a long time, especially once you realize that "losing" money is another way of saying they re-invested it into growing the business. This avoids losing the money to taxes and shareholders.
First, make it work, then make it right, then make it fast, then, make it bloated!
Our office is right down the street from Red Hat's new HQ. We've noticed a substantial increase in the average value of the car driven by Red Hat employees during the last few months.
I'm sure that this earnings news is going to have some impact on the cost of Red Hat's shares, but I don't think that it will bother option holding employees all that much!
Mike Eckardt meckardt@spam.yahoo.com
As for their profits, it shouldn't be too long before they're in the black, on the balance sheet. Their growth has been consistant, up to now, but should take off now that they're getting the attention of the suits as well as the techs.
A couple of years ago, I predicted that within 6 years, Linux would match Microsoft in the total number of users out there. 4 more years to go, and it's looking like I might not be too far off track.
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
Question: Isn't Caldera a public company as well? How has there stock done compared to Red Hat?
Blender And Linux Fan
Red hat loses 3.6m and gains 5.4m and is splitting two for one. This flashes that gets that little warning light in the back of my head blinking.
Just the same, I can't see why this would be bad, there just isn't really much of an obstacle to their growth. This is probably what REALLY freaks me out.
marotti.com
Perhaps we should move #redhat to UnderNYSE... Their servers don't suck so f***ing much...
-troll taker
It all depends on market value. If the stock plunged to what common sense would dictate the company was "really" worth, there'd probably be a number of companies lining up to buy them out, thus driving the stock price up (unless a majority of shares were held back by RedHat to prevent this).
Losses are not really indicative that the company isn't worth anything. They made money - they just are re-investing it, which is exactly what they should do. If you could declare a loss to the government, even though you'd made all sorts of money, I'm sure you would, to avoid taxes.
First, make it work, then make it right, then make it fast, then, make it bloated!
I don't know anything about stocks, this is just my guess.
What happens when you pour $1B into linux over 2-3 years in this huge hype? Are we all sure this wont change the face of Linux, and OSS in general from all this money being involved? Remember money tends to corrupt - you will see branding, competition inside linux itself, and suddenly people will be writing code for one distribution that will absolutely NOT work on any other - because its been designed that way. Major software writers today who have 'OSS morals' may not do this - but what will joe blow coder for Linux startup X be doing when his boss indicates that this is a Good Thing[tm]?
Already we see MUCH code that is totally unusable on *BSD coming out of coders using linux. They're writing code thats pretty general, they just happen to be using linux at the time - next thing you know it wont run anywhere else.
What happens when people take this the next step further and write for only one distribution?
Bill Gates will be looking to do a replay of the fracturing of the Unix market as what happened in the 80s - we do NOT want this to happen again.
Math
[Guess who feels stupid now!!!]
:-)
I give up... you?
A stock split doesn't make anybody any money. If you had $1000 of RHAT immediately pre-split, you'll have $1000 of RHAT immediately post-split.
Kind of like the guy who went in to buy a pizza, and they asked if he wanted it cut into 8 pieces or 6 pieces. He said "better make it 6, I could never eat 8 pieces..."
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- Stephan.
Carpe diem.
A couple of folks have misreported this (including Slashdot). Third quarter growth is 24 percent from the previous quarter. The growth is 63 percent compared to 3rd quarter of last year.
Well, it's a fairly simple matter to have revenues of $54 million and a net loss of $36 million. Revenue is (to oversimplify a bit) the amount of money brought in. Net income (or loss) is essentially income minus expenses. In this case, that means that Red Hat spent more than they took in. Most accountants would accuse me of tragically oversimplifying this matter, but that is my right as an American. On another tack, RedHat's revenues were significantly higher this year than one year ago. That is a good sign. Now it's up to management to turn those higher revenues into a net profit. I am not exactly a RedHat fan, because I believe that RedHat is showing some early signs of Microsoftian corporatism, and that is highly counterproductive to the open source movement. However, I must temper my anti-RedHat sentiments with the facts that a) they are promoting a better product than Microsoft has ever created, b) they are open source contributors, and c) it's just plain Linux. We all take a few bitter pills, so I guess I'll reluctantly throw in my support for RedHat's continued success.
Windows is going the way of phlogiston...
Three years ago RedHat estimated there were 7-10 million Linux users (in the US?). I also heard that up until then the marketshare was doubling every year.
Well, I think it's obvious that Linux is growing faster now, but let's say it is still x2 every year. That somewhere between 56 and 80 million Linux users, right now.
1) Are any of these numbers still accurate?
2) If so, and Linux is doubling (or more) every year, why did RedHat do so poorly (24% vs 100%)?
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Linux MAPI Server!
http://www.openone.com/software/MailOne/
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send flames > /dev/null
Only 'flamers' flame!
True that their revenues did grow, but their losses grew at a greater percentage. This is what you should be looking at here, I think.
The net brought us online daytrading, and now with Red Hat, VA, PERL, etc., the daytraders finally have something to do: get all excited over HOT! HOT! HOT! linux stocks.
This split is great. Previously options on RHAT were just too damn expensive--you buy and sell options in units of 100, and at RHAT's prices that meant the minimum options bet was a couple thousand dollars. Now that RHAT options are affordable, all those daytraders who are furiously reloading their stock screens and trading every five minutes have been given yet another way to blow their life savings away.
Given that the average slashdot reader is obviously a sweaty, shifty-eyed daytrader who spends all agonizing over every 2-3% change in the price of linux stocks, this definately is stuff that matters!
Instead, it has been suggested a la game theory that the split is an informational signal that management insiders are bullish about continued increases in the share price. mentioned FWIW...
I don't know anything about the stock market; this is just my guess.
So either they've become much more inefficient (unlikely), or, they're investing more aggressively (very likely). Whether I (as a hypothetical shareholder) think this is good depends on whether I think their business plan warrants, and will repay, the risk.
It seems obvious that they are simply investing more aggressively (partnering with Dell, buying Cygnus being primary evidence of this).
Personally, I'd be more concerned that their revenue grew only 24%. That just doesn't seem high enough for all the hype around RedHat, Linux, and their stock price. At that rate, it will take them approx. 3 years to reach 12 million in annual revenue. Another 3 to reach 25 million.......
They'd better ramp up that growth rate in the next year, or it won't be good. But, I expect they will.
First, make it work, then make it right, then make it fast, then, make it bloated!
I'd like the phone number for the Post Office, please :)
Absolutely. Slashdot needs to go back to its roots and not become a money obsessed site for other people. Being bought was clearly a bad thing. Look what happened to Wired after they became obsessed by large piles of cash, it turned into an unreadable waste of space.
And the adverts suck. Maybe its time to fork slashdot. Or rename it slashdot.com.
Apropos of nothing, Vladimir Nabokov used the image of a red top hat to imply someone beheaded by a guillotine.
Granted the more money RedHAT has to pour into Linux the better, however the market valuation is TOTALLY out of line with redhat's future earnings potential. Other established companies (such as corel and oracle) can come up with a linux distribution, package it with their products, support it themselves and leave redhat high and dry. No one (except us nerds) gets excited about an operating system. They want applications. If I were a stock trader, I'd be buying other linux companys, redhat seems to me like a baloon waiting to burst.
I only wish I had money to buy redhat, because at $18B, the company is still vastly undervalued. MSFT is worth $579B, so by my calculations, RedHat still has $561B worth of expansion yet to do. BUT... it won't happen overnight.
To those who get it: buy a goodly chunk of RedHat, and then squirrel it away and forget you even have it. Don't read the "investor" message boards, and don't check the ticker. Just hold onto it for dear life.
Your children will thank you.
"Get away from my house you freak!"
-Neal Stephenson
There is no K5 cabal.
I am not the real rusty.
Am I being naive or is it strange that the stock price rose after the company declared that it is operating at a loss? Seems to me like the stock is being inflated way past its real value and is bound to crash sooner or later...
The Linux tsunami will lift all our boats, whether one owns a particular stock or not. One reason to be sanguine is the nature of Linux companies, which is to spread the wealth beyond just the top execs. So, if you are good with Linux, odds are that within 5 years you will be working for some company that gives equity (stock options, whatever) to ALL workers as a matter of course.
So don't sweat it. I think we'll all be doing quite nicely.
While it is possible to buy one share, in practice you must generally buy 1 "block" of shares which on most markets is 100 shares.
I take it you do not know anything about how a company works, eh? Look at what Redhat has done in the past quarter. It costs money to buy a company or two or three. The 'loss' is just reinvestment, and it is a sign that the company is really making changes. Try waiting more than one quarter to judge things like this.
It's just one more milestone in the mainstreaming of Linux, and people like to hark those milestones with fanfare. Linux is officially big enough for a company selling it to split its stock.
And besides, there are legitimate reasons for splitting one's stock: avoiding the impression of overvalue, reducing the violent swings in value that correspond to changes of a few percentage points, increasing the pool of stockholders to broaden the holdings, etc.
"If one is really a superior person, the fact is likely to leak out without too much assistance" -- John Andrew Holmes
CmdrTaco, where's the disclaimer stating that you own Red Hat stock and have a vital interest in reporting positive news about the company? Slashdot is getting really sleazy these days.
The bizarre prices of these internet stocks and Linux can't possibly last but the interesting question is will the US economy collapse as a result of the huge falls that are on the way? Will it cause panic amoung the day traders and then the hardened professionals?
Will you have to dodge the jumpers when you walk past a cyber cafe?
Deleted
Also, if you got in at the IPO and held the 400 shares (or the 100 I had in the second group), you can now sell some of your shares. And, if like most Linux coders, you could only scrape up enough to buy 100 shares, now you can sell 100 of them and stop scraping by with no cash reserves.
Will in Seattle
acquisition != loss
take a look at an introductory accounting text.
Ah, the wisdom of the stock market! What does this consist of? About three quarters of the men and probably half the women in the country, making bets on matters they know nothing about. Just think of all these people, and how much they know about Linux and computers, corporate finance and macro-economics. If you think this adds up to close to nothing, you may be right. For now they are all merrily marching in one direction, on the golden road to unlimited wealth. But mobs of uneducated people are not necessarily the safest bunch to fall in with. I'll stick to coding and get rich the old-fashioned way.
The other 99% owners and prospective owners of RHAT are influenced by the psychological level of a $260 share price versus a $130 or $86.66 share price.
The tough part is beating the crowd into the split news. Fuhgeddaboudit. Figure out how to get in on the next RHAT-at-80 instead (hint: read Slashdot and look for emerging companies).
Sadly enough, you're not the only one who thinks that way.
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"People ask FAQs all the time". - David Allen
The on-line trading service I use (Investorline) won't let me trade odd lots easily on some exchanges. Does anyone here have any reasonable amount of experience buying/selling "odd lots"?
I.e. if hot Internet/Linux companies are supposed to grow at 100%+ year over year in this growth phase, and Linux in the past has grown 212%/year (IDC figures), would this "lowly" 63% annual growth (24%/quarter) signal a downward shift in momentum? And is the split supposed to signal the opposite?
Your friendly paranoid,
LinuxParanoid
In light of all the linux and Internet companies being worth billions for producing no revenue... we have:
LINUX.COM announces IPO
(December 21,1999) NEW YORK -- Linux.com, the definitive linux commercial, e-commerce, e-world, e-desktop, internet/intranet open-source based solutions in the western half of New York state, has filed with the SEC for an inital public offering. Pending approval of the SEC, which is inevitable since linux.com follows all internet stock trends of having no revenue, no content, no business model, and no paradigm, linux.com
will start trading under the stock ticker LINC on the Nasdaq.
Investors are anxiously awaiting to jump in on this IPO which is expected to shatter VA Linux Systems record setting 700% increase in one day. "It's got Linux, and it's a dot-com! What more can you want!?" asked an unnamed Goldman Sachs employee. "Who cares about what they do? I'll just ride the wave and then jump off at 315 1/2!"
Sitting in his two room apartment in Eastern Syracuse NY, Ned Flounder, CEO, CTO and "Big Boss of the Company" highlights what Linux.com is all about. "It's about bringing a new operating system to the masses. It's about Microsoft sucking! It's about the Internet. It's about connecting these operating systems together in a world of global internet intranet mass PAN connectivity! It's about open source, and it's about closed source! It's about the global economy and e-commerce and amazon.com! It's about computers, and calculators! About the end of the millennium, with two N's, and the ball drop at Times Square... it's about positioning ---", at this point, Ned's ramble became incoherent. When WSJ reporter, I. M. Bile, asked about pecific business plans and company missions, he was told he had to leave since the plumber was coming to fix the toilet.
Already, news is a buzz across the Linux community which is featured in such sites as Slashdot.org. "Hey! We already have a website called Linux.com! This is BULLS**T PATENT INFRINGEMENT! FREE THE CODE!", exclaims
one Slashdot user. "FIRST POST!!!!", screams another. All, in all, the Slashdot community eagerly awaits a faithed letter, that will allow them to access this IPO if they deposit $10,000 into an E-Trade account and pass a multiple choice exam. Slashdot users, as well as wall street, wait with baited breath for the Linux.com
IPO.
Happy Birthday Tricia, I'm in the Michigan Militia....
Forget the Commies mate, I get stopped every time I leave the house at night. I have to show my papers, recite the alphabet and dance for them. They're called The Police, and I don't mean the the rock band. Know the airline commercial that ends with "You are now free to move about the country"? Don't believe it.
The revolution will NOT be televised.
I do believe, however, that the market for RedHat is as large, if not larger, than the one for MS. It's a different market, and a different approach, but I think it's just as big. I don't think RedHat, even if it was worth 579 billion, would ever look just like MS, in any way that matters.
And as for "shutting out windows on the desktop," it'll never happen, because the desktop won't be a market worth competing over. Today's computing environment will appear, fifty years from now, as quaint and charming, but slightly odd in the same way that the steam-powered mechanical contraptions of the victorian era strike us as quaint and charming, but somehow just a weird way of doing things.
Sorry, but I'm in a prognosticating mood tody... :-)
"Get away from my house you freak!"
-Neal Stephenson
There is no K5 cabal.
I am not the real rusty.
This post is gonna make me sound like THE MAN :) but if you don't like the story, just don't read it! There is really is no reason to complain in the thread and use up needless bytes.
With that said, maybe it is time for a "financial" icon so those not interested can simply filter it all out. Filters are great- I filtered out Katz a few months ago and have never looked back.
/joeyo
2^5
I buy and sell odd lots with Datek all the time. They charge ~ $10 a trade, and consistently fill my odd lot requests very quickly.
-- Gary F.
actually you may be right about the minimum number- I am not a professional investor. I remembered the 1/16th thing from a book on investing I read a few months ago. I should have added a disclaimer, and would have except that the darned pie smelled so good :). Is temporary insanity a legitimate plea on slashdot? Anyway the argument holds regardless of what the unit of measure is... when you halve the accuracy of the measurement, you double the error, and the error works for you or against you depending on whether the tick is up or down. Since it is usually up, it is generally a Good Thing if you own stock before the split. This really is not that difficult of a concept...
/. if you are going to protect it with a password? Am I missing something fundamental?
The point I am making is that if the stock splits, 1/16 of movement in post-split share terms is as valuable to you as 1/8 in original-share-space. Splitting twice, 1/16 becomes 1/4th. Splitting three times, 1/16th of post split share becomes like moving 1/2 originally... and it is somewhat easier to move 1/16th than 1/2. This multiplication factor is cumulative over time, and saying it doesn't happen is foolish and ignorant. It isn't primarily day traders who make money from this, since people who own stock before the split make more money than people who hang on to it for 2 minutes. Splitting is good, and makes money, or the rich guys wouldn't do it.
Kootch- why put a link to your homepage on
Rev. Nehemiah
... and there is no doubt, that one day he will be
where the eye of his telescope has already been
Linux.com technically already IPO'd - they're not a separate company, they are run by VA Linux.
Sorry to detract from the joke :)
I love it. You wouldn't happen to be "S" from comp.os.linux.advocacy, would you? He's made similar loopy claims, though not nearly as eloquently as you have.
Because they are plowing money into their 'product' instead of controlling expenses instead to make a profit. They are very early in their lifetime as a companyand are spending money expanding and ramping up their offering and r&d in anticipation of future revenues.
Someone in the market thinks that they will be making _far_ more that $54 million in revenue per year in years to come. So they pour all that capital into expenses like paying salaries, hiring talent, etc and in 5 years their revenue should be in hundreds of millions, then they will dial back on expenses to generate a net of 30% or more. That kind of a return will be what corporate investors will probably be looking for from a semi-mature growth company. I dunno. If I had cash on hand I would buy up some shares.
First of all, we should ignore investor speculation, loans, and projected earnings and look at total earnings now to decide whether software can sustain a business, which obviously it can't unless you're Microsoft. Even after they shifted from software sales to internet portal banners, they still lost money. Well the consistant losses that not just internet companies but everyone is posting should raise a red flag. Did anyone make money last year? As far as I'm concerned, there are just a lot more people borrowing money than there were in 1993 but the underlying profits that would have distinguished us from 1929 are non existant.
Look, you can argue that Red Hat is or isn't a good stock buy at this point, but you can not argue that it makes any sort of technical sense. Based on earnings, P/E and any other indicators you can imagine, Red Hat is a laughably overvalued stock. No amount of aggressive investments or aquisitions are going to be able to fix that.
The whole thing is going to come down hard. When it does, I worry that the whole Linux community will be discredited in the eyes of the business-types. I also worry that a lot of geeks (many of whom think they're somehow suddenly market gurus) are going to lose their shirts.
Geeks without shirts can be downright ugly.
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Every year during my review, I just pray the words "slashdot.org" aren't mentioned.
First, the stock split should not by itself cause any change in anyones paper worth. The fact that news of a stock split cause prices to jump just indicates that the market has totally lost its senses.
The few experts in value investing (who actually try to value a company based on profits, growth and dividends) are crying with frustration because the market now trades on press releases, hype, rumors, buzzwords, partnerships, patents on the obvious, promises and hot air. The 1999 nasdaq is indeed the tulip bubble and the south sea bubble all rolled into one.
Second, lets see redhats market cap. What is it now, 15 billion? that is about the market cap of Apple computer, or any other real company that can make a few hundred million a quarter in profits from now to eternity. Dont forget -- redhat stockholders are holding it because they think it will outperform the market, bonds, cash in the bank or equity in their house. It isnt going to outperform a wet paper bag based on dividends for the next 10 years, it can only outperfom based on increasing that market cap further through further stock price rises. The greater fool principal. Motley fool has a large following indeed, but fools with cash are not a limitless commodity.
So the last level of this nasdaq ponzi scheme is going to get burned, when a taxi driver tells you about his portfolio, it is all over. Those who buy Andover.net, RHAT, or any other stock with P but no E take note: when it comes crashing to earth, you will not have a chance to cash out. Those in the know will cash out before you, you will be left with a bunch of pretty certificates entitling you to the A4 tray of the redhat photocopy machine, and the tar from the crash will get pasted over every new and risky stock out there, VCs will retire to their gated communities to count their offshore winnings, and a lot of bright people with good ideas will struggle to scrape together the cash for a security bond on some office space..
3 years ago, this frenzy was in the middle pages of the wall street journal, 2 years ago it was in the NY times, 1 year ago it is discussed in office hallways, now it is in the web pages of "news for NERDS, stuff that MATTERS".. this is way past a time to sell.
Off topic: did anyone else take the time to read the long andover net IPO: do you realize what they have planned for slashdot? "beyond the banner ad". Go check it out.. you are reading a site that is going to cause a collision between those who (mostly) do not accept ads and web commerce, either actively or passively rejecting it, and a company that simply must sell you stuff to pay its investors back. It is going to be an interesting battle.
everybody keep investing.. I need to put a down payment on my house in saratoga.
LW
I LAUGHED when I saw this. Here we have a company with a market cap of more than $18 BILLION, with revenues of only $5 MILLION, and a $3.6 million loss for the year. I can't help but think that at some point, there are going to be an AWFUL lot of people losing an AWFUL lot of money once the stock price starts to reflect the real value of the company. Is the market just STOOPID or what?
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Every year during my review, I just pray the words "slashdot.org" aren't mentioned.
oh yay a massive forum for hyping stocks which
make nothing and will ont for a long time !!!
its even worse with va since they are so
outcompeted.
why must there be so much commercial crap on here now ?