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Red Hat Stock Splitting 146

Posted by CmdrTaco from the splitting-heirs dept.
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.
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Red Hat Stock Splitting More

Red Hat Stock Splitting

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  • 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.

  • This is not news (Score:4)

    by um... Lucas ( 13147 ) on Monday December 20, 1999 @07:13AM (#1459365) Journal
    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.

  • 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 [geocities.com] meckardt@spam.yahoo.com
  • I'm surprised they're only doing 2:1, given the share price. They could easily have managed a 3:1, or even squeezed 4:1, and still kept the share prices within the "conventional" range (read: between the ground and the stratosphere).

    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.


  • Question: Isn't Caldera a public company as well? How has there stock done compared to Red Hat?

  • 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.

  • Damn stocksplits... (Score:3)

    by Jikes ( 123986 ) on Monday December 20, 1999 @07:19AM (#1459372)
    Perhaps we should move #redhat to UnderNYSE... Their servers don't suck so f***ing much...
  • 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.
  • If the stock is made more accessible, then smaller investors are more likely to buy it, thus making it more attractive. Granted, it's not much, but it can drive the price up slightly. Also, splitting is a sign that the stock price has gone up considerably, and thus is doing well.

    +++

  • Stocks don't split all the time, though in this bull market it does happen more often. When a stock splits it makes the stock more affordable and I suspect that it makes the stock price a bit more stable. If you are suddenly given 200 shares where you had 100, you can sell half and keep half where previously you had to sell all or nothing (generally selling anything less than 100 shares is considered an "odd lot" and your not always allowed to sell "odd lots".

    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..."
    ----
  • Is this really "news for nerds"? I mean, every company splits its stock once in a while, and when looking at the current price of RHAT it looks quite reasonable to split it. But that doesn't change anything substantial, so I can't see the reason why this is a /. news.

    - Stephan.

    Carpe diem.

  • Growth is 24 percent versus last quarter (Score:5)

    by JMcJames ( 8496 ) on Monday December 20, 1999 @07:29AM (#1459380) Homepage
    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.
  • No, Caldera is still privately held, and is owned largely by Ransome Love and the Noorda family trust. There have been rumors of a Caldera IPO floating around by haven't heard any particular date or price mentioned.

  • When the source is open, I just can't see this happening. This has been touted time and time again, and it just keeps not happening.

    It does hilight the importance of educating those consumers now thinking about Linux in what free software is, what the various licenses mean, and why it matters that the source be now and forever free/open, even if the consumer is not a programmer and never intends to be. We need to make sure people understand how the source protects consumer interests.

    I have seen no signs of efforts to create incompatbility, although I have seen potential for incompatibility arising out of sheer complexity. That's why I think the LSB project remains important.
  • 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%)?
    ---
  • that is the sound of the gun as I shoot my self for not having the money at the time that I was invited to buy the stock.. does anyone else want to shoot them selves because of similar situation.. I am glad that they are doing so well, I just wish I was on the bandwagon...

    send flames > /dev/null

  • Re:Gawd (Score:1)

    by Anonymous Coward
    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!
  • this is an unsolved problem of finance theory, but many finance professors don't buy the "more affordable" reasoning because small investors can trade in odd-lots, and the odd-lot surcharge is not enough to explain the rise in share prices after a split.

    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...

  • Re:This is not news (Score:3)

    by Nehemiah S. ( 69069 ) on Monday December 20, 1999 @07:43AM (#1459390)
    This is very inaccurate. A stock split is good for the stockholders for several reasons.

    First off, the smallest amount of change that can occur in a stock is 1/16 of a dollar- called a "teenie" in wall-street speak. Think about what this means- originally there were 60 million RH shares, now there are 120. If the stock moves at the minimum possible delta, you make twice as much money when the stock has split. It doesn't sound like much, but once it has split 2:1 four times you are talking rounding up (or down) a whole dollar/original share every time the price moves. That's a lot of capitalization on a technicality.

    Another reason the price matters is that many people are shallow enough to think that since RHAT is going for 236 and MSFT is at 110, RHAT is overvalued. They don't always look to see that there are 5.174 billion microsoft shares out there, compared to the 60 million rhats. (because msft has split a dozen times or more)People are more likely to buy 50 shares at 75 than 50 shares at 250- that is just human nature.

    I can surely think of more reasons, but my office is starting a Christmas party and if I don't run I will miss the apple pie... yumm...

    Rev. Nehemiah
  • You can't necassarily look at a stock split in such a static light. A stock split can be the cause to an effect. For instance when a stock is so highly priced as RedHat's the split may make the stock affordable to "smaller" investors, and the increase in demand could cause the stock's price to rise post-split. On the other hand, when the stock splits each investor ends up with twice as many shares, and if they perceive the stock as volitile they might be inclined to sell as much as half of their holding because the split enables them to keep some and sell some; and that would lower the value of the stock.

    I don't know anything about the stock market; this is just my guess.

  • If you had $1000 of RHAT immediately pre-split, you'll have $1000 of RHAT immediately post-split.

    Yes, I know, but I've read that after stock splits the price usually jumps up, because the stock becomes more affordable (ie, it's ~240 now, but it will only cost ~120 afterwards, so it at least seems cheaper, though of course you only own half a share in pre-split terms then).

    Of course this is a sign that RH stock is doing good generally as well.
  • 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.
  • Some nerds are interested in the financial markets, and some are not. that does not mean that the mainstream "news for nerds" should boycott the interests of those nerds who may not be mainstream.

    Of course if anyone asks me, I am not a nerd; i am a geek.

    -drew

    ---------------------------------------
    "But can she pound the mileage?"
    "I'm going out for an easy 10, how about you?"

  • 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.
  • suddenly people will be writing code for one distribution that will absolutely NOT work on any other

    Well, this will happen. I'm a Win32 coder by day (oh, the shame, this will be instant Score : -1 Troll :) and getting into Linux by night / weekend. I don't have time or inclination to do much more than that; there's too much to get my head around and frankly too much coding can kill you. I don't have time to play with *BSD distributions.
    That said, I do play at coding under Linux (port scanning stuff at the minute hehehe :). It's hard enough as it is, without having to get into other OS's as well. But when I get something together that's worth letting other people see, I will GPL it, and publish it on my website. And if someone wants to use it on *BSD, they're welcome to take my code, and get it to run on their box, it they think it's a useful tool. That's the power of the GPL, IMHO...
  • Some would argue that splitting the stock is an artificial way to increase it's market value, mostly by the mechanisms you describe. They mask the real and true data of how the company is actually doing, and try to get people to buy with these psychological tricks. Shareholders might say this is a good thing to do - it makes my stock go up, but some would suggest that artificially inflating the market is a bad idea. I generally would agree that it is bad to do.

    Great sig, btw!!
  • Apropos of nothing, Vladimir Nabokov used the image of a red top hat to imply someone beheaded by a guillotine.
  • Aha! I've been spouting off about how 24% growth didn't seem so hot to me, so thank you for making this clear.

    63% is very respectable, and a world of difference from 24%.

    (switching to my on-lin broker......)
  • If the use of linux as a whole is doubling every year, that doesn't necessarily mean that each linux distro's sales will double every year. It is still free software, and many people will get their CD's from cheapbytes, so nibble off that bit of the market. Then figure that since there's no legal restrictions on the number of installs you can do from a single CD, that'll bite off another chunk of redhat's sales (ie a company would only buy one disk, even if it was converting ten servers to linux). Factor in people installing from their buddy's RH 5.2 CD, etc etc. You get the picture.

    I think a 24% increase in sales is actually pretty stunning, for an idea that most people said was insane to begin with. I mean, they're selling software that can be had for free or extremely low-cost in many places (ok, I know 80 bucks isn't particularly expensive, but it is compared to 3 bucks). In any case, I think that capturing nearly a quarter of that 2x increase in direct sales is pretty damn good, and better than I would have projected for them, if I were trying to work out the numbers before the fact.

    Just my 2% of $1. :-)

    "Get away from my house you freak!"
    -Neal Stephenson

  • yes, but the next time a news story or alliance drives the price up $6, you make $12. Given the volatility of many stocks and Linux's current hot prospects, this should make stockholders happy. Too bad to hear their revenue growth, I hope they can weather the storms (from cautious stockholders), show OSS has a business future, and remain Free. (not beer)
  • You are right and you are wrong. Yes, the split itself does not actually make anyone money, but as a result of the split
    - shares become more affordable
    (which will spur additional trading == good thing)
    - and if the company continues it's success it leads to better profits down the road.

    If RHAT goes up 17 points because of some good news wouldn't you rather have double the shares you had last month???

    So yes, someone that got in at $80 is doing fine right now.
  • This "odd lot" stuff is a myth. There is no additional cost to buying/selling 100 shares, although commissions might kill you. This has been true for like ~20 years now, since deregulation of the securities industry.

    The issue of small investors, however, is very real. If you want to invest $2,000, and the share price is $3,000, you can't even get in the game. If the share price is $1,200, you can only buy *1* share, and you have $800 you can't do anything with. I've made these numbers up, but when you're talking share prices in the > $200 range, the effect is an issue. Smaller share prices let you fit the money you have to invest to a number of shares with greater ease.

    And for an extreme example, check out Berkshire Hathaway, which has never split its stock. The ticker is BRK.A, and it's trading at $54,000 a share today. They issued special shares, BRK.B, to deal with this issue, which trade at exactly 1/30th of the price.

  • This has gone beyond rediculous... (Score:2)

    by Anonymous Coward
    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.
  • This is why you will sell and people who understand the business will not. I see an awful lot of short-term daytraders grabbing at linux stocks because they're hot right now, and then freaking out at the fact that the company is losing money and dumping them. You will lose in this deal, because you don't understand the market that the company is in.

    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

  • 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.

  • Here's why it's news (Score:3)

    by / ( 33804 ) on Monday December 20, 1999 @08:25AM (#1459416)
    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.

  • Just because Red Hat has a market cap of 18.25 Billion does not mean that they have 18.25 billion dollars cash in the bank. All it means is that based on the number of shares currently being traded, people are willing to pay ~$260 for one of them. Multiply by X shares, and you get the market cap.

    Red Hat got a small portion of that 18 billion when it sold shares in the IPO, and can make more if it seels more of the shares it holds. But that would increase the supply on the open market, which pushes the price down.

    All of which is not to say that there isn't a lot of Linux money out there now, only that it may not be as much as you think. As they say, paper money...

    -cwk.

  • 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.
  • First off, the smallest amount of change that can occur in a stock is 1/16 of a dollar- called a "teenie" in wall-street speak.

    Then why do I constantly see stock prices like 23 31/64, or 45 117/128? If these prices are valid, then your first point doesn't carry a lot of water.

    Honestly, I would like to know...

    Your other points do make sense, tho (as opposed to making $$)

  • 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?

  • Just for the record, I am interested in financial markets, and I have Red Hat shares myself. But I'm a bit surprised to find every single financial news now on slashdot ... if I want those I usually went to Yahoo [yahoo.com]'s split calendar [yahoo.com] or something similar.

    And on nerd vs. geek, since I'm not a native English speaker, I'm not that good at those fine differences - sorry.

    - Stephan.

    Carpe diem.

  • 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.

  • acquisition != loss

    take a look at an introductory accounting text.
  • That is 24% PER QUARTER. That is an TERRIFIC growth rate. Most companies do well to get 15% per year. Dell, one of the fastest growing companies I ever heard of has been growing at 50%/year in the past.

  • completely bogus.

    "If the stock moves at the minimum possible delta, you make twice as much money when the stock has split"

    - nope. you're making the same amount whether the stock splits or not. Face it. And if you're really worried about a 1/16 up or down, you really should get another job as shown by the daytrading info out there.

    ":Another reason the price matters is that many people are shallow enough to think that since RHAT is going for 236 and MSFT is at 110, RHAT is overvalued. They don't always look to see that there are 5.174 billion microsoft shares out there, compared to the 60 million rhats. (because msft has split a dozen times or more)People are more likely to buy 50 shares at 75 than 50 shares at 250- that is just human nature. "

    no offense, but the average investors doesn't make a difference to the stock price. Fund managers and investment bankers that buy in blocks way and above the means of the normal joe investor are the ones that move the stock. "Market Makers".

    One reason that it DOES make sense for companies to split their stock is to make it more available to their employees who have options and strike prices on their shares. The company really doesn't care about joe investor in terms of making the stock price more available.

    One other thing that splitting the stock IS good for is increasing the float (number of outstanding shares). Increasing the float generally stabilizes the stock price a bit, especially in low cap stocks or stocks that only sold a few million shares. This prevents run-ups on unavailable shares of stock.

  • The Wisdom of the Market (Score:3)

    by vinyl1 ( 121744 ) on Monday December 20, 1999 @08:36AM (#1459430)
    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.

  • Splits make tons of money (Score:1)

    by Anonymous Coward
    Yeah, all the people who own RHAT based on discounted net present value of future earnings stream will agree with you, splits are bookkeeping.

    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).

  • ..."freedom", a popular buzzword that is at best meaningless.

    Sadly enough, you're not the only one who thinks that way.

  • The company I work for has had a habit of splitting; the board likes to keep the price around 100-120 a share. So, the price gets up to 150 or so, they declare a 3:2 split, 200 or so gets a 2:1. Last time we were trading at about 80, they called for a 3:2. The price went up 10 that day. At the closing bell on the div-date, we traded at 300, which takes us to 200 split adjusted. We're now at 250. *

    What's my point? When a split is declared, the price of the stock tends to go up, so everyone can double the number of shares they have, for the reasons mentioned in some of the other posts in this thread. Fact is, this is typical stock behavior. So, even though the actual split doesn't change the value of the stock, the calue goes up in the time preceding the split. Incidentally, we tend to take a small hit in the week or so after the split (no doubt from the people who sell off the shares they gained, in profit-taking).
  • Well technically no one can stop you but you have to find someone who wants to buy 99 shares. If you trade on-line your order will be defered for manually processing in most cases meaning your order might take quite some time to process. In this wacky world I'm sure you can do it, but I'm not sure how easy it would be.

    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"?

  • What do you think the odds are that Red Hat is announcing the split at the same time as their earnings to help enthusiasts ignore any possible negative interpretations of revenue growth in favor of the potential upside of the split?

    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.
  • 2) If so, and Linux is doubling (or more) every year, why did RedHat do so poorly (24% vs 100%)?
    CmdrTaco didn't read the article. It is an increase of 24% compared to last quarter. That corresponds to over 130% growth a year.
  • The trouble with this argument is that there is really no way RedHat can be the "next Microsoft" with its current business model. Because they sell a shared resource, they will never gain the sort of market-share Microsoft has with the kind of margin Microsoft has. In addition, since they don't control the source, they can't use undocumented APIs and the like to promote the developer or application wings of their business.

    They are not a bad company. But they will never be the "next Microsoft" as long as they are a Linux company. To be the "next Microsoft", not only would Linux have to shut out Windows on the desktop, but RedHat would have to drive all other Linux distributions and app-makers into a small minority market-share. That's just not going to happen.

    (Thank God for that, BTW.)
  • 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.
  • And on nerd vs. geek, since I'm not a native English speaker, I'm not that good at those fine differences - sorry.

    One way to look at it is that a nerd is someone who thinks he's cool or wants to be cool, but most definitely is not cool, while a geek is someone who really doesn't give a damn one way or the other.

    The Geek Code website (no link because I don't remember where it is/was) had another "nerd vs. geek" definition. The Jargon File [tuxedo.org] should also have some useful info regarding nerds and geeks.

  • My point wasn't really that RedHat is destined to be the next microsoft. I think it's clear to a large (and growing) number of people that being like MS is just not the right way to be.

    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

  • [#Std_disclaimer] : I own shares in RHAT.

    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

  • 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...

    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 /. if you are going to protect it with a password? Am I missing something fundamental?

    Rev. Nehemiah
  • Except the ticker symbol is LNUX.

    Linux.com technically already IPO'd - they're not a separate company, they are run by VA Linux.

    Sorry to detract from the joke :)

  • Know this: when you're in line at Egghead buying a copy of Red Hat Linux, you may as well just take your $50 and send it off directly to the Chinese Communists in Beijing.

    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.

  • Rule # 1: If it's on Slashdot, it automatically becomes "News for Nerds", because this is the news, and this is where the nerds are.

    Rule # 2: Most stories have at least one post that says "Is this really news for nerds?". I think this is a waste of a perfectly good post.

    Rule # 3: If you don't like a story, skip over it. I, for example, tend to skip over anything written by JonKatz, because I can't stand his writing style. But I don't go bitch about it (except right now, of course).

    Rule # 4: Somebody cares. One persons earth shattering news is another persons complete drivel.

    I'll get off my soapbox......
  • 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.

    I'd be more inclined to agree with this if he's "forgotten" to include the loss RedHat took or shoved that news out of the main announcement.

  • 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.

  • Are you seriously suggesting a post that says "all it will be worth in the future is for getting rid of the fecal residue of a Mexican Pizza" doesn't deserve the worthless/flamebait tag? I can appreciate criticism of Linux, but I have no problems when offensive garbage is moderated down.

  • 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.
  • It HAS already happened. As it is people write code already for LINUX specifically, even tho its just generic unix code (hell, with a bit more care it would even run under Win95). I dont see a problem with writing the most compatible code if the overhead to do so is low. But already people rely on specifics of that disitribution.

    As I said, there are a number of things that cant be compiled for FreeBSD just because they were developped under linux. And Im not talking IPCHAINS or something else that talks to the linux Kernel. Im talking generic stuff like "this is a nice personal scheduler" or the like. (Possibly a pathalogical example, but there are many examples near this.)

    Check this The Register Article [theregister.co.uk] about how Redhat is now losing more money than it was before.

    What happens when the major shareholders come calling for their profits in 3 years? These shareholders may not understand OSS at all. "I thought this was going to be the next Microsoft! Where's my money!" and they may suggest solutions of "Well, obviously all the linux distros are doing well, I dont see why we dont hold 95% of the market. Start branding, just like Microsoft did." Before you know it, people working at these companies are going to have to make important decisions about how they want to write software, as well as package it, or even market it. THere's no OSS marketing guide out there, we're just trusting people out there to do the right thing.

    And when these upstanding moral coders who believe in OSS have to QUIT to standup for their beliefs - then someone will take their place in 5 seconds, and do as the executives say, who do as the board of directors say, who in turn represent the shareholders.

    I think we will begin seeing this in a couple years.

    I KNOW that redhat is supposedly making its money on service and support as well as training courses and the like, but people are likely to call up support at the place where they bought their distro from. If RedHat doesnt hold 95% of the Linux distro market, then by definition it WILL be facing competition. This is a good thing for consumers in traditional pay-for-software markets, but bad for OSS which is bad for consumers when the software WAS free.

    Competition makes companies stake out territories and hold onto them. This is done through branding as I said, and through fostering loyalty. If enough loyalty isnt generated from mere 'great service', then I would say that proprietary code and protocols will be rearing their ugly heads before we know it.

    All Im saying is we should be VIGILANT. Is there any reason not to be?

    Math.

  • I believe the argument is that /. has a story capacity of n stories a day. If m stories are posted that a lot of people think isn't news for nerds like it was back in the good old days, then /. is only ( ( 1 - m/n ) * 100 )% as useful as it used to be.

  • [sigh]

    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.

    ----

  • I guess I'm just not seeing this. A thought experiment:

    Shares are worth $32. You own one. It goes up by 1/16th, or $2. Your stock is now worth $34.

    Now it doesn't go up; instead, it splits. Now you own two shares worth $16 each. The value goes up by 1/16th, or $1 per share. Your total stock is now worth $34.

    What's the difference?

  • 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.

  • Boo! I know, I know. Linux.com is run by VA and they IPOed. I was trying to make a funny! =]

    -Nick Vlku
  • Wow.. if i buy 3 shares now, I will have 6 when it splits.

    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?
  • Well, it does make sense to make money in this fashion if and while you can. It's just a matter of knowing when to escape.

    ----

  • I don't own any dork! (God I wish I did!)
  • 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 ?
  • Remember, RHAT is still in their lockout phase. So none of the employees are using RHAT stocks/stock options to raise money for those nice cars. It's likely that they got the $$$ off of other Linux company stocks (Corel, Andover, Applix, etc.)
  • I don't disagree with you that it is something to be concerned about, but so long as the code is GPL'ed it simply cannot go far. They can't take it under. Period. Sure they can write proprietary extensions, but how many open source developers will use a closed interface? I know I won't do so.

    I think the concern is overstated.

    "Branding" is fine (well, not really -- Intels campaign suggesting that a Pentium III will miraculously energize your 33.6 kbps Internet connection springs to mind), but I do not see how adding closed extensions to RedHat could possibly be perceived as an advatage in the marketplace. Let's say you're a closed source ISV (like an Intuit) who decides to port your product to Linux. Do you do it in a way that ensures you can market to the largest possible number of computers, or do you do it in a way that narrows the market?

    Microsoft did not get to be the lion's share of the desktop market by fragmenting the market; they did it by consolidating the market. Developers started writing apps exclusively for Windows after Windows controlled the market. Many ISVs still develop Mac versions, and those that don't took a look at the cost of porting their code to gain a small market share and decided it wasn't worth it. If RedHat amounts to 50% of the Linux market, and Linux comes to be, say, 20% of the PC market, then ISVs might well port to Linux, but are unlikely to port to RedHat exclusive extensions.

    As for anyone dumb enough to buy RedHat stock at current prices, you get what you deserve. By now, it should be obvious to anyone that there is a bit of a bubble in the technology stocks, esp. the linux and .com stocks.

    If you bought 'em cheap, swell. Hold 'em. If not, I'd take my profit before it evaporates.
  • 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.


    The difference is, not every user will be paying for the software. How many copies of Linux do you think a company that wants to run it on 500 machines? 1, 5, maybe 10?


    Even if the number of Linux users matches that of Windows, copies purchased will be an order of magnitude less - and divided between the different distributions.

  • No offense, but...

    CLUE: We're talking about the actual price, not the %increase expressed as a fraction (in your example, that would mean that 32 -> 32 1/16)

    Although it is debatable that the hard minimum slice of stock is 1/16 of a point, stock splits are all about perceived values (ppl who unknowningly think that 335 is too high for yahoo, but is a bargain for 80, after it has split 4x).

    Fear the profit-taking on 12/31/99!!!!!

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