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VA Linux Systems Opens at $300 397

Well, I'm going to drown in submissions if I don't post the news that VA Linux Systems opened at 299$ a share, which is some sort of record, I'm sure. You can check it's current trading level as well, albeit with a twenty-minute delay. Congrats to all involved.
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VA Linux Systems Opens at 300$

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  • because there are a few simple reasons:

    people who work for VA are genius'
    VA is like the only linux hardware company
    VA has had an excellent past history

    now we will eventually see how everything levels out but there is no reason why this couldnt be legitimate

    "The importance of using technology in the right way has never been more clear." []
  • hmmm It would be kinda cool if you could bid for stock on more fun then the silly system they have set up now for stock trading.

    Actually, there were actual securities up for auction on ebay once, a few months ago. The SEC put a very rapid stop to that.

  • had its IPO yesterday

    Dec. 8, 1999-- Inc. (Nasdaq:ANDN - news) was admitted to the NASDAQ National Market System following its initial public offering of 4 million shares at $18 per share. The company's stock trades under the ticker symbol ANDN. Company address: 532 Great Rd., Acton, MA, 01720. Telephone: (978)635-5300. ml []
  • Watching this and the Sycamore Networks IPO, I find a really frustrating trend, that the brokers underwriting the IPO bid the price of popular 'net IPOs up incredibly high before releasing them for public trading.

    I'm not sure what the exact price was, but VA sold shares initially for about $30. Then, when the public could get them, these shares had risen approximately $270 each.

    The Sycamore Networks IPO went almost the exact same way (though it was first available to the public around $200).

    I spent some time interning in trading for an investment bank, and as I recall someone once told us that an issue should be priced slightly below where the brokers expect it to stabilize once it's publicly traded. So a $14 issue should end up trading in the $20 range.

    Unless I'm missing something substantial, both the companies and the public are getting screwed on IPOs like VA and Sycamore.

    Who's making all the money here?
  • My take on these stellar IPO's is this.

    What we are seeing is the almost overnight creation of a new empire. In a very short time brand new companies are coming up with capital comparable to the long time giants. If they utilize this chance they will be able to solidify their presence in the market. Kinda like building the inside of a structure after buildingthe shell first.

  • When a company IPOs, they typically base their price on what they are worth as a company. Investors (well, good investors) try to get shares on what they think the company will be worth in the future. So, if the market doesn't see farming equipment as having huge growth, the stocks won't have huge growth. If the market sees the internet or the medical industry as having huge growth, the stock value of the company will be more than what the company is worth now. Get it?
  • ...that the article [] mentioned by jbrw also has a blurb about's IPO? I guess the guys are still knee deep in their "quiet period".


  • And didn't it used to be 15 minutes? Is it just a way to get money for "realtime" data? Is it meant to keep power away from the small investors by acting as a buffer? Is the info publically owned or private?
  • Actually it hit a high of 90 so far...

    Look here []
  • Yep, this is part of the reason why Corel shares started to go up 'n up 'n up. The rumours said that Red Hat was going to put some of their shares towards buying Corel. Makes a lot of sense too, since Corel is profitable again, plus they have the Linux software that'll sell in business circles. Corel even has a hand in a Linux hardware company with [] and their Netwinders.

    With this whole Linux frenzy, I bet Cowpland has other ideas. He's no dope, so watch for a half dozen Corel news releases in the next two weeks as Corel tries to push their stock even higher.

    ...Then use your shares to fund purchases of companies that actually make money. (At least that way when it returns to earth, the stock drop won't hit anyone too hard.)...
  • I've never understood why a stock split should be so important, the total value is still the same, so if a company is overpriced before a split, it must still be overpriced after a split, since it doesn't change the total value, i.e. if I have 10 shares at $100, and it's split 10:1, then I will have 100 shares at $10. The only purpose I can see of a split is to avoid monstrous share prices, maybe some people want to invest only a few hundred dollars, and if the share price is in the thousands, that is impossible. Perhaps they're also done to fuel people's belief that the actual share price is somehow related to how the price will develop in the future.
  • by Capt Dan ( 70955 ) on Thursday December 09, 1999 @09:39AM (#1471542) Homepage
    I'm really not surprised about the opening day so far. Red Hat was the first big deal like this, and all the people who missed out on that one are trying to jump in on this one.

    But anyways, althought this situation is a good one that makes a lot of people happy, is still needs a least a little ribbing... So onto the Fake News:

    Austin (Reuters) - As part of the ever increasing wave of Linux IPO's to hit wall street this year, linux hardware maker Joe Smarty announced a filing with the SEC to take his company "Joe's Appliance Shack and Pager Hut" public. The company will trade as JSHK.

    "We're very confident about the stability of our business and our future product success." States Joe. "For example, take a look at our Linux Toaster. It makes 8 perfect pieces of toast a minute, our competitors can only get 4 pieces using WinCE. We made 20 G's off that baby this year alone."

    When assistant manager Steven "Lord Gorth" Ackerman was asked what the new money would be used for, he had this reply: "well, we're looking to expand. Buy a bigger building, hire some new people. The toaster was great, it makes damn good toast, but the market place is so broad! And so much of it is just not being addressed at this time. With another 10, 20 or 5000 coders we could be making refrigerators that double as Quake servers!!! I'd want that. Wouldn't you want that? Everyone needs one of those. Not to mention what we could do with coffee makers..."

    There has been some worry however that the hype surrounding IPOs would inflate the market capital of Joe's Appliance Shack hundreds, even millions, of times above the worth of what is still essentially a toaster company.

    Joe has no problem sharing his future company strategy with worried investors. "Don't worry," says Joe, "Once we hit a market cap of 3 Billion, we'll buy AOL. Maybe Disney."
  • I was like "How the hell did they get MY name?" I see...Sourceforge...

    I was wondering how they picked up my name too. It's not like any of the projects I'm involved in are huge visibility projects. Now I know.

    Of course, I didn't get any shares. *sigh*

  • Nope.

    Put in for 100, got 0.

    Now, this may be due in part to the fact that I sold my RHAT within 5 days of the IPO. I thought that 500% was a good gain. Silly me.

    Now I'm probably blacklisted at E*Trade, to boot.

    Well, what's $27,000 anyway - right? :)
  • by David Jao ( 2759 ) <> on Thursday December 09, 1999 @09:43AM (#1471552) Homepage
    The problem with Dell, IBM, HP, and Compaq is that they cut corners to save costs. VA boxes are extraordinarily high quality Linux machines, and people will pay money for that.

    Put a Dell workstation and a VA workstation side by side, and yes the VA workstation will cost more. But for that price you get ECC RAM, SCSI tuned for Linux, a CD drive that rips audio properly, a sharper monitor (even if you decide to go with the 17 inch monitor against the Dell 21 inch), and a motherboard that won't break every year. (I'm speaking from personal experience here. Your mileage may vary.)

    Maybe in the future things will change, but right now companies like Dell only pay lip service to Linux without actually committing to it. Dell picks hardware to run on Windows and slaps Linux on a few of their machines. VA picks hardware to run on Linux. I doubt that Dell will ever see enough Linux volume to justify the same level of commitment to Linux as VA.

    Clearly if you don't have money you don't have a choice, but if you do have money and you want an x86, you can't go wrong with a VA Linux machine.

  • Seriously, my broker says the people buying it have no clue as to what Linux is, or what VA Linux Systems actually does, just that it "is" Linux and that it's supposed to be a good company.

    They are in bubble mania territory.

    I refuse to buy at this price, I'm sorry. When it dips below $100 I'll think about it, but I'd just be wasting my money or going on total speculation at this point.

    And I just blew my morning waiting in Seattle (Fremont) for AT&T @Home to install my cable modem and they showed up 3.25 hours late. I left after 2.5 hours and rescheduled. At least they'll let you do a Linux install, but they only guarantee Windows.

  • redhat shares. We have another open source programmer at my company who got in on va, but didn't get the letter from redhat. It is kinda fair.
  • Dell will have a hard time convincing anyone who's been in the computer industry for more than a few versions of linux that it has a committment to linux.

    but then all they need to do is fool the investors, and then their stock price can go to 300 too.

    If they changed their name to linuxdell that would be good. Or if they fired all their windows support staff and hired recent CS majors who only used linux, that would be good. Or if they pried all the windows keys off their keyboards and put linux keys on. or if they got logitech to create a mouse that said linux on it...

    or if Michael Dell changed his name to Michael Linux... yeah that would be good for at least a doubling in stock price.

    ... and if Michael Dell called a press conference to announce that "windows sucks!" - that would work too.

    or if Dell started shipping servers with hardware RAID controllers that had GOOD driver support for linux and other intel unices.

    heh - none of those are going to happen (maybe the linux keys on the keyboard...)
  • by Rabbins ( 70965 ) on Thursday December 09, 1999 @08:40AM (#1471562)
    It went as high as $230 a share, and is now stabilizing a bit at around $265.

    This puts VA Linux at a $1 billion dollar company right now as we speak. Not bad for a company with about $14 million in revenues (they did not profit) last year.... and they were initially trying to raise about $50 million.

    Congratulations to those that weer able to get some at the offering... for those that got it afterwards, you may be in a bit of trouble!
  • by ch-chuck ( 9622 ) on Thursday December 09, 1999 @09:50AM (#1471566) Homepage
    what Louis Rukeyser [] is going to say about this, he's usually pretty OPTIMISTIC.

    A lot of monied people have tried M$ and found it wanting - they probably know there's GOT to be something better - and Linux CAN fill that order.

  • by chrisd ( 1457 ) <> on Thursday December 09, 1999 @08:40AM (#1471568) Homepage

    As you can expect, the underwriters are very busy taking and making confirmation calls. Don't worry about it, everyone will be contacted and every voice mail will be returned. we have 40 people on the phones at DBAB and they are all working as fast as they can.

    If you are -hyper- paranoid about not getting through with your confirmation, feel free to email me at [mailto] and I'll forward on your confirmation (if you are in the program only, of course) and answer any questions you might have.


    Chris DiBona

    Grant Chair, Linux Int.

  • by Cy Guy ( 56083 ) on Thursday December 09, 1999 @09:51AM (#1471569) Homepage Journal
    "Not bad for a company with about $14 million in revenues (they did not profit) last year...."

    EBIZ which runs TheLinuxStore [] had $15M in sales [] last year, yet they're trading at $4.5/share.

    Clearly VA Linux is over valued. There is only so much money you can make assembling off the shelf components. They basically can only compete in three areas: price, quality, or service. Though my impression is VA Linux quality is higher than EBIZ, EBIZ has better prices. Quality I think is moot as they would have have to hire and train 100's (if not 1000's) of new techs to install and service new equipment if their sales were to get anywhere near where they should be to justify the stock price. Such a fast staffing-up will inevitably lead to some quality problems.

    Another company that shows how overvalued VA Linux is, is SGI. SGI has something like 1.2M shares of VA Linux thanks to early capital investments. That stock now represents about 1/6 of the total value of SGI.

  • This level of recognition for Linux has been a long time coming. And it's good. This will channel a LOT of money toward Linux projects, and the companies that haven't yet woken up to Linux fever will now catch it in a big way. That's the plus.

    The minus is that at these prices it will take a LONG time for the underlying securities to justify their prices. That hasn't stopped the craze surrounding things like Yahoo... but in the case of Linux, there are still some issues around how a Linux company makes huge wads of cash. (It's easy to see how a Linux company can make a reasonable living, but that's different).

    You make huge wads of cash when you establish a brand and you take away business from everyone else. Is it really possible for VA and RHAT to become THE linux brandnames? Or does the GPL guarantee that they will always have so much competition that their margins will always be fairly thin. That's the minus.

    So I'm not sure I would invest in these companies at these prices... but I certainly have invested my whole career into Linux, and this is very, very good for my career :-)
  • by HitchHik ( 103069 ) on Thursday December 09, 1999 @11:05AM (#1471586) Homepage
    It means that day traders have noticed the same thing most of the Linux stock
    watchers noticed the last week or two. So thay drove the price up to huge heights.
    Now the ticker is ticking down from it $320 high....
    Its at 247... as I type. People who wanted to earn a Ferrari for Christmas
    got it, and now are running to the dealership.

    So what to do? Hmmm, well one thing is sure. VA Linux is going to all
    over the news tonight. Meaning that LINUX will be on the news
    tonight. This again, will give the general public more information
    about it and many more will see that Linux is a GOOD THING(TM).
    This will drive more "Real" investors to Linux companies, which will drive
    the Linux index up.

    I predict that Linux companies will continue to grow at a faster rate
    than the market. I'd even say much faster, but some of you might take
    this against me, if it doesn't happen.

    Anyway, these are just some of my thoughts after the $13->$23->$30->$250->$320->$247
    ride of VA Linux (LNUX) this afternoon.

    What to do?
    Buy Linux/Open Source related companies at a price you feel comfortable
    with. Just don't come to me and complain about losses. :)

    I really think that this conformation from Wall Street means that Linux is
    being taken seriously and that it will continue to prosper.

    So what companies are we looking at?
    Look here [] to get an idea about some of them.

    I hope I didn't bore you with these comments.


    P.S. And rember how Linus answers the question:
    Uninformed Interviewer: What do you want to do with Linux?
    Linus: World domination, asap.
  • by jflynn ( 61543 ) on Thursday December 09, 1999 @01:26PM (#1471588)
    My, all the doom and gloom.

    Yes, Linux stocks are vastly overvalued. Microsoft stock is too. I'd agree a correction is likely, and I share the hopes it won't be too drastic.

    But not owning a share of stock myself, I can see this as simply good news. A bunch of people on Wall Street, one of the most conservative and change-hating bastions in mainstream America, are willing to bet a little money on Linux. Nay, they're tripping over their own feet to do so. Hah! :)

    VA Linux and Andover both got considerable stocks of cash out of their IPO, and that won't go away even if the whole market goes south. Since those are two of my favorite businesses, good deal, and congratulations all around.

    Andover's IPO may have been especially significant, even if not quite the record smasher VA's was because it is the first instance of a very successful Open IPO of which I've heard. Those who were toying with the idea of buying VA stock after it reached the public, only to find it opening at $300, will readily understand the advantages to regular people of a Dutch auction style IPO now. Andover not only made a bunch of bucks, but they found a way to share it with anyone who wanted to and could afford to buy.

    Frankly, unless you've got stock in the market, it seems time to lighten up and enjoy the ride. It's not like it's slashdot reader's money driving the stock to these heights, there's nothing we can do to to slow it down now, and no lack of mainstream voices yelling about the overvaluation already.

    I imagine the Linux companies are a bit nervous about the situation too. Who would want to be the one blamed for the stock market tumbling? Not the time for dumb moves or foot-in-mouth disease. Shareholders forcing proprietary schemes on Linux companies to preserve artificially high stock prices is the only conceivable downside I can see to this. Shareholders must be made to realize that proprietary scheming could tank their stock quickly thru developer boycotts and general bad publicity.
  • Red Hat still employs only 7 engineers

    Not quite true. Where did you get that idea?
    Last Time I checked, Red Hat employed 37 Engineers to work on the OS, plus several others to work in support, system administration, training and consulting.
  • It really is unfortunate that this happens. I also believe VA Linux is an excellent company, and I would love to own a piece of it... but I also want my money to appreciate, and at this level the company has a TON to grow before the stock price has any reason to go up.

    The way I see it, VA Linux is not going to be a good investment for another 5 - 10 years (even if the company continues to do wonderfully)... unless the prices crashes back to reality.

    As an interesting side note... over the past 20 years, IPO's have had an average annual return of less than 5%... and that only counts the ones that have made it!!!!

    Not the best place to be investing... I will go with the proven ones any day.
  • And didn't it used to be 15 minutes?

    From the Yahoo quote page: "Quotes delayed 15 minutes for Nasdaq, 20 minutes otherwise."

    Is it just a way to get money for "realtime" data?

    dict capitalism when you get a chance.

    Is it meant to keep power away from the small investors by acting as a buffer?

    Well, most small investors do most of their "buying" and "selling" during off hours, when realtime NASDAQ, AMEX, and NYSE quotes won't be much help. Additionally, most of the "small investors" are members of eTrade and online trading websites that do provide real-time quotes to paying members.

    Is the info publically owned or private?

    Privately-owned by the respective exchanges. There are, however, some freely-available realtime quote websites. Free RealTime [] is the one I use.

  • sure I get it, but things are out of control - it's all too speculative, and all of the IPO daytraders who don't even know which way is up are just getting their news from equally misinformed financial analysts or tech journalists (read: non-techies) who spend all day reading slashdot to look for good tips to give to their customers/readers
  • by evilpenguin ( 18720 ) on Thursday December 09, 1999 @10:00AM (#1471615)
    You know, I'm not a market expert either, but I don't think the bursting of the tech bubble will have serious economic consequences, except for individual investors who go out and buy yachts and multi-million dollar homes on the basis of all this paper profit. Yes, VA Linux has an $11 billion market capitalization. That will, at some point, collapse back to a reasonable $500 million - $1 billion market cap. That won't hurt VA systems, it won't hurt the overall economy (much) as it is a miniscule fraction of the GDP, even the whole speculative tech sector (.com's and linux specs) is but a small part of GDP. The people who will be burned is those who have thrown any significant part of their own assets into these. Unless you're on margin, you can't lose more than you bet. If you bet the farm on VALinux and don't have most of your money in a diverse portfolio of stocks, bonds, real-estate, and cash, then you will lose the farm. And you'll deserve it too.
  • Imagine if you had bought Dell stock when they went public.

    Actually.. it is not as impressive as you think.

    Dell went public in 1988.... for four straight years after their IPO, Dell stock languished without making any real gains.

    In fact, in 1990 it was trading at 40% less than what it IPO'd for.

    Would you have been able to hold onto it for that long after losing almost half your money after over two years?

    It is never that great to get in on an IPO at the ground floor. Dell is a one in a million company where it would have eventually paid off. Get in on a company when it is established, has proved it knows how to make money and trades at a reasonable valuation.

    That is how you make money in the stock market.
  • by cjsnell ( 5825 ) on Thursday December 09, 1999 @10:02AM (#1471617) Journal
    It's my opinion that the VA Linux stock
    is terribly overpriced. The fact is,
    VA Linux is in a very competative marketplace
    and their competitors (IBM, Dell, Compaq,
    Gateway, etc) are better poised to capture
    the Linux server market, should they decide

    Let's look at what VA does:

    1) They make Intel desktops and servers

    2) They produce a value-added linux distribution
    that's tuned for their equipment, which generally
    consists of widely available PC hardware.

    Now the problems with their business model:

    1) Their Intel desktops and servers are hardly
    unique or exceptional. Having hands-on
    experience with VA Linux equipment as well
    as Dell, Compaq, IBM, and Gateway equipment,
    I can say that I think VA Linux has a long
    way to go before they catch those guys when
    it comes to the quality of their servers.
    Desktops may be a different story because their
    quality varies widely from producer to produce
    and even within product lines. On average
    though, I'm not impressed with the quality of VA Linux's server hardware.

    Additionally, Dell and the other big boys buy
    their hardware in much larger volumes than VA
    does. VA cannot hope to compete with them on price any time soon. If you don't believe me, price out a
    two CPU rackmount server from VA and then price
    one of IBM's models out and see who comes in cheaper.
    A lot cheaper.

    2) Their value-added distribution is not that "value
    added". Since their tweaks to the kernel are all
    open-sourced before they are sold, they are openly
    available to their competition. It would not be
    that hard for one of the bigger vendors to put
    together a server based on well-supported hardware
    and acheive the same performance that VA is getting
    out of their boxes. In fact, it has already
    been done [].

    I can see one of the big vendors getting into the Linux
    market "big time" within the next few months. Essentially,
    all they would need to do was hire off some of the kernel
    developers out there and financially back a major Linux
    software project like KDE and they would already be ahead
    of VA Linux. Remember, these large manufacturers are
    buying their components in much larger volumes than VA
    Linux and can blow VA out of the water on pricing.

    In conclusion, I think VA Linux is a really great
    company, boldly breaking into a wonderful new market
    but they don't have the garaunteed market that stock
    traders seem to think they have.
  • Doesn't anyone get it? VA left some $270/share on the table!

    People at VA own most of the shares of VA. If it had IPO'ed at $300, they might not have even sold all the shares. If you're VA, sell the IPO shares for less than the expected short-term market value, and the feeding frenzy may raise your remaining shares. Then use your shares to fund purchases of companies that actually make money. (At least that way when it returns to earth, the stock drop won't hit anyone too hard.)
  • Is it initials, like V? and Augustin ?


  • If this has been discussed recently, I missed it and I apologize.

    I think it's all in the ticker and in the company's new name. Calling themselves "VA Linux" and LNUX is causing the unwashed masses to think they are Linux. All the hype that they've been hearing about? Oh, that's where this Linux thing comes from. This company called VA that makes an operating system called Linux. They must be the next Microsoft.

    Was it wrong for VA to choose a ticker symbol that suggests that their company is all about linux, when actually their company is all about hardware? Perhaps.

    Dell Computer is not considered to be a Microsoft Windows company. They're a hardware company that made a choice early on to install the Operating System that they believed in. Now they're also choosing Linux, but that's pretty recent.

    VA is not Linux. Red Hat is much closer to "being" Linux than VA is, and they're certainly not Linux either. Linux is a group of people all over the world, and they can't be bought and sold on Nasdaq or anywhere else.

    I'm done ranting, I think. If you made it this far, you might as well moderate my sorry ass up :)


  • there are two types of sell you need to think about -- "market" or "limit". Just tell the broker which you want.

    A market sell means to sell the stock at whatever the market is currently trading it at -- this may be higher or lower than your information, and it's intended for folks who want to cash in as QUICKLY as possible.

    A limit says to sell at a certain point -- say, $250. That way, if it dips below $250 a share, your broker will sell it immediately. this is intended to keep you from losing value if the price drops. But if it goes up to $300 the broker doesn't sell. Then maybe you call later and raise the limit to $275, so if it drops down to $275 it will sell.
  • Red Hat and Alan Cox spent the RH IPO cash on crossing Building 3 with Hanger 18. They got a platform that's out of this world, but nobody is supposed to know about it.

    (Or was that Transmeta's experiment? :)

    Probably, VA are going to start looking into serious mass production (which'll cut their costs) and/or expanding into the high-end Workstation market, which is staggering around in a drunken stupor, right now.

    P.S. If you read my earlier post, on VA thinking they were worth at least as much as Red Hat, I was right! They came out of IPO only inches away from Red Hat's -current- stock value.

  • You would be a fool to get out of the market before the year is over. That is market timing, and not one single person has ever been able to do that succesfully.

    If you are invested in the internet bubble, you should be out of it anyways... find yourself some quality growth companies at reasonable prices, there are plenty out there. Hell, if you want help... write me.

    The market has come bounding back after every single market crash or correction within 10 years! Ride it out... you will be very happ you did.

    Do you think Warren Buffet will be leaving the market?

    For those recommending to put your money in oil or gold... that is just ludicrous. Those markets can be just as volatile as the stock market. Interest rates can kill them. The difference is, over time, they do not appreciate... the stock market does.

    I recommend putting money in BEFORE the year is over, in an attempt to take part in a possible influx of money when the year is over and the world does not come to an end (we hope). Raise a little cash or place some limit orders so you can catch some quality companies if they are riding any waves down.
  • President Clinton announced a budget *surplus* some time ago. How come the US treasury still reports a higher US national debt every month?

    Because of the basis that is used for the accounting. The budget "surplus" announcement is based on the total amount of money the governemnt takes in vs. what it spends.

    The debt however includes money that one part of the government is borrowing from another part. This year the overall government ran a surplus, but the General Fund ran a deficit that was covered by borrowing from the Social Security Fund. This borrowing from the SS fund shows up in the total debt figure.

    There are some people that argue that this should not be counted as 'Government Debt". Others feel that it should. I am not an accountant. Some people even think that decreasing government debt is a bad thing because the result will be people will not be able to invest their money in stable instruments like government bonds. Most economicists believe that government debt is only a problem if it is increasing at a faster rate than the GNP.

    Next year the government is hoping that they won't need to borrow from the SS Fund. If this occurs the debt figures on this page should start dropping.

  • Why is this a good thing?? It's shit like this that's gonna make the stock market die. I mean.. I like VA and everything.. but there a computer reseller.. what's so special about that? Any one who buys at that price is insane..
  • Seems you need a lesson in stocks. Just because the stock is at $200, doesn't mean Red Hat has free access to all those dollars.

    Seems like you could ALSO use a lesson in stocks. If you think that VA sold every share you're very mistaken. Most companies (admittedly I haven't confirmed this from VA's SEC filings but I'm sure someone else more knowledgeable can confirm this) retain a reserve of their stock as a war-chest of sorts.

    IPO'ing companies make money in two ways. They make some immediate money (at a lower price) from the direct sale of the stock @ IPO price. In this case, VA made $30.00/share.

    They also "make" money in that they retain shares of stock which (after IPO) have an increased value. That value is useful for Secondary Public Offerings (if needed) but more often for acquisitions. (e.g., we're buying your public company, and we're going to do it by swapping your stock with our own at some determined ratio). The higher the value of the company's own stock, the lower that ratio is.

    Is this case, VA could, right now while the fire is hot, acquire companies using stock swaps. (There are probably SEC requirements that they wait a certain time post-IPO, but that's the gist of it).

    For classic examples of this, note that Yahoo has almost never (I don't want to say never, but I can't recall any time they did it) paid cash for a company. They simply dip into their stock reserves and use that to acquire companies. VA could do the same thing.


  • That's an absurd comment. Everyone knows that stock prices these days aren't driven by the price of the company... they're driven by supply and demand.

    That's precisely my point. The intrinsic value of the company has nothing to do with it. The stock price is driven by confidence in the market. When that gets shaky because of perceived risks, the bottom falls out.

    Consciousness is not what it thinks it is
    Thought exists only as an abstraction
  • At the time I ran the model (one year ago... almost to the T), was comparable to VA Linux... sorry for not making that apparent.

    amazon was grossly over-priced then, and it is today... even though tons of people have made a lot of money on it... the vast majority are going to lose their shirts. I just do not know when it is going to happen.

    Because you actualyl own a share of the company with the stock, the price has to correlate with the business at some point... it has for the past 500 years... no matter how much the internet, biotechnology, computers, TV, cars, the radio, spices and tulips change the world.

  • FYI, a limit is "this is the limit of what I am willing to spend this equity, buy it for me at the best price you can, up to NNN dollars", or "this is as cheap as I am willing to sell this stock for, if you can't get this for it, don't sell it". The type of order you are describing (where if it dips below N you sell as close to N as possible) is a "Stop" order. You are trying to stop your losses.
  • If VA threw a dozen developers behind mozilla development, that would get things up to speed rather quickly. This is so important to not only the linux community but the entire UNIX community. I wish Sun would do the same.

    And, we need GOOD versions of all the major plugins. The only linux plugins that don't suck rocks are flash and acrobat reader. Real player for unix is pure schlock. If we want to push linux on the desktop, we need plugins for the major media formats.

    If there's an audio/video link on CNN.COM, linux needs to be able to decode it with a plugin in the browser without building extra stuff and hacking plugins.

    My short list of plugin wants for linux/unix

    - good, recent decoder for all versions of RealAudio/Video with all codecs and compression supported
    - modern quicktime plugin support and support for all quicktime image formats.
    - macromedia shockwave support
    - windows media player - if people are posting content with it, we need to be able to view it.

    C'mon, what's taken so long for the unix plugins? I can understand Micrsoft not porting their player in hopes of slowing their marketshare loss, but ... c'mon Apple, Real, Macromedia??? No excuse.

    Fix it!
  • It stands for the surname initials of the founders:

    James Vera
    Larry Augustin

  • by ralphclark ( 11346 ) on Thursday December 09, 1999 @12:03PM (#1471693) Journal
    It's all going to go belly up some time in January or February.

    Any dealer with a brain cell knows that certain sectors such as internet services and certain software stocks are massively overvalued. They also know that nobody is likely to bottle out just yet because, well, why should they? Thus they continue piling into hi-tech IPO's and anything with the trendy new open source label because they know from recent past experience that they'll make a quick killing.

    At the same time they also know the market is expected to undergo occasional spontaneous corrections because it's chaotic and therefore unstable.

    Brokers might be prepared to sail pretty close to the wire, but the key is to get out before everyone else does, so they're constantly sniffing for clues that the party is about to end. All it takes is for some news item to make a few dozen big brokers nervous at the same time, and they'll all start dumping stocks. And when one market starts this process, the others follow as the world turns.

    Market falls are usually triggered by bad news of some global importance, but when stocks are overvalued it often appears that market reaction is still well out of proportion to the initial trigger. I'm thinking particularly of the 20% fall of the FTSE-100 (I think the Dow and the Hang Seng suffered about the same) during just a couple of days in 1998 because of a sudden loss of confidence. The real reason IMO was that a correction was simply overdue and somebody decided to get a head start on the others which got the ball rolling.

    It's almost as if brokers in any given market share some sort of herd instinct. This is an inevitable aspect of the mediocrity of most dealers. Assuming that you don't know the market better than 90% of your fellows, the best way to keep your job is to be sure that you're doing what everyone else is doing even if it's against common sense. In other words, look out for trends and try to be one of the first to follow but don't get caught out there all by yourself. So they'll continue milking the cow for all it's worth until they begin to start feeling uncomfortable as the realisation slowly dawns that the cow they bought is little more than a mirage.

    Surely many brokers must realise that time is almost upon them now. If so, many of them will be looking for a plausible excuse to switch strategy early next year. Of course they can't afford to just sell everything without good reason. But just about any bad news at all should provide a good enough excuse for the more cautious to ease themselves out of the game.

    Fortunately for them, the media will be expecting a few Y2K glitches to hype up into front-page scare headlines. Now some minor Y2K cockups are inevitable even in those countries and corporations who dealt with the problem, and there are plenty of countries with significant economies who never really got it together. And our economies are all pretty tightly linked these days. So I believe those twitchy brokers will get their excuse.

    When they do react, it won't go unnoticed. Trends are particularly easy to spot in electronic order driven markets, you just watch the online order book. So once people notice that the smart money is moving out, the trickle will rapidly become a flood.

    I could be dead wrong about all of this but I feel it in my bones that a major market correction is on its way. I just hope the banks don't go down too like they did in 1929. If it's not just technology stocks but everything that's overvalued then we're in even bigger trouble. And that shortages stemming from interrupted supply lines (when producers and distribution companies find themselves paralysed by Y2K breakdowns) don't result in hyperinflation.

    I'm certainly going to liquidate what stocks I have before the new year. The problem is, there's nowhere I can think of to put the proceeds that's immune to all of these risks :o/

    Consciousness is not what it thinks it is
    Thought exists only as an abstraction
  • I can't believe anyone would buy at that price... They must be, but what does VA appear to offer an investor? I love the company and wish them the best, but if I'm sitting down and trying to decide which of those new fangled linux stocks to buy what makes me choose VA at >$250 a pop?
  • People who were in on the IPO won't get burned, but anyone who's buying it now at $250 might be. Of course, that's what I thought about RedHat, and it's gone nowhere but up.

    The trick, of course, is to sell it just before it plummets back down to a reasonable price.

  • [Why does] their stock sky-rocket[], when there are little or no reasons for it to do so, other than people's fascination with linux, and the potential for the so-called 'future growth'?

    You answered your own question. Potential for future growth, and a perception that Linux is the next big thing, is quite enough.

    There are a lot of people trying to invest a lot of money in something that will reap them a profit. Among the best opportunities for growth they can identify are:

    Internet infrastructure.

    The next PC operating system after Windows.

    Linux fits both those categories: It already drives a big chunk of the servers on the web, and everywhere they look are signs that it has become the OS of choice for future growth.

    VA Linux is an even better fit to both categories: An established seller of Linux-driven servers and clusters. What an opportunity!

    And why do you think they're "Stupid"? Don't YOU believe that Linux and the Internet are taking over a bunch of very lucrative markets? If that's true, doesn't it make sense to buy in?

    And if you bought in early and the crowd's attention then pushes the price beyond all reason, doesn't it then make sense to sell, take an "outrageous" instant profit, and use your puffed-up pile of money to buy in on the NEXT Linux/Internet opportunity?

    Investment is a market. Markets are partially a gamble. (They call that "market risk".) Ownership is a bet that what you own will be worth more than you paid for it. Why not buy what you expect to be valuable, thus betting on the horse you expect to win? Once others decide it is valuable and offer you more, why not sell, collecting your winnings?

    Sure, sometimes people get carried away and offer a whole lot more than makes sense. But they do that for used cars, too. Value is defined as what other people will pay.

  • ... I don't care how trendy Linux is, this market cap is just downright insane...

    I sincerely hope people don't get burned by this...

  • Other items which need to be addressed:
    • Financial App aka quicken like thing.

    I'm working on it :)

    The Kulturwehrmacht []
  • If the price doesn't settle back too much, VA Linux is set to be the bigger first day gainer [] ever - a dubious honour currently held by The Globe [] (the URL appears to be incorrect in the Yahoo story).

  • It's funny to see how little Wall Street still understands about the tech world. I give them credit - they did a great job on this stock by finding the word "Linux" in it, which, evidently, adds several billion in value right away. VA Linux does nothing impressive - they build computers and load Linux on them. Well WOW. A small company in Texas you may have heard of, named Dall or Dell or something, has been doing the exact same thing for over a year. So does Compaq. Other entities that build computers and load Linux on them ... well, me for one, and a lot of other ./'ers out there. I wouldn't exactly call VA Linux the greatest thing since sliced bread; yet they posted the biggest single point gain I have ever seen. This kind of gross overpricing is the epitome of what investors are talking about when they bemoan tech stocks.
    Don't get me wrong; I really like the people at VA. They bankrole the development of quite a few notable projects (E, for one), which is great. But I think Wall Street investors are complete idiots.
    "Some people say that I proved if you get a C average, you can end up being successful in life."
  • But is this insane pricing cause VA is such a great company? Or is it because investors know that anything with "linux" in the title or company profile will skyrocket on opening? I'd love to see how these stocks perform over time.

    I think this is a case of investor feeding frenzy. Linux has a ways to go before the average Joe can use it.
  • The above post is right on. People justify paying $250/share for LNUX now because of the promise of spectacular future growth. But come on--even speculation has its limits, for $DEITY's sake...

    There is a tool to quantify future growth. It's called a PEG ratio. Put simply, it expresses the ratio of a stock's P/E multiple to its projected earnings growth per share. In a fully and fairly valued situation, the PEG ratio of a stock = 1. If it's a lot more than 1, the stock's overvalued, and you should be examining the stock as a short potential. If it's a lot less than 1, look to buy. If, on the third hand, you can't compute a PEG because the company doesn't have a P/E (LNUX anyone???) you're speculating on unsubstantiated future value, rumor, or worse.

    Let's look at some PEG's:

    Massively negative E value (-1627). Can't do a PEG.

    Massively negative E value. Can't do a PEG.

    Ooooh. E only -235! Its a bargain! =P

    Does anyone but me see a trend here?
    I'm not going to say you can't make real money on these stocks. BUUUT...I won't say you can't make money in Vegas, either...
  • by MindStalker ( 22827 ) <> on Thursday December 09, 1999 @08:47AM (#1471731) Journal
    Well that depends upon how long it takes them to do the paperwork to split the stocks 3 or 4 ways. If they can get it done in a hurry, it will stabalize a bit and other people will be accually willing to buy it.
  • No, I understand that. I didn't mean to imply that they didn't retain a huge number of shares. I was more pointing out that the company itself does not get the $250/share of the *shares that went to the public.* They got the $30 from those shares. Brokerage whores got the profits.
  • by substrate ( 2628 ) on Thursday December 09, 1999 @08:48AM (#1471739)
    You don't need to be rich to get in on an IPO, of course it doesn't hurt.

    Open an account at an online broker, I've got one at E*Trade, and every pay check put in a small percentage of your paycheck. When you put away money upfront its less painful then trying to come up with a wad of cash for the next big thing.

    A money market account at E*Trade pays a pretty respectable interest rate. A lot better than my traditional bank and it has free checking. If I ever need to raid it I just write a check.
  • by hystrix ( 13799 ) on Thursday December 09, 1999 @08:48AM (#1471743)
    I did everything right, confirmed my bid for 200 at $30. And didn't get anything. I realize this is extremely common with an IPO.

    Did ANYONE get stock with E-Trade today? Those that got in early the last few days? I would just feel better knowing that someone got something, cause i am starting to think that E-Trade kept them for themselves when they saw the asking prices.
  • The Stop Loss is a form of Limit order, only it acts as a downwards trigger, in that Stop Loss $250 means "when the price drops to $250, sell at the best price you can get". A standard Limit sell order would mean "when the price increases to $250, sell at the that price or higher".

    Then there are Options, which I regard as being so speculative as to be gambling, but are really the purchase or sale of a contract to buy or sell a specific number of shares on a specific date. You could purchase an option for 1/15/2000 of LNUX for 100 shares - this would mean that you pay today for the right to buy 100 shares of LNUX at the price specified (say $200) from the person who sold you the option. If LNUX was trading at $150, you would let the option lapse; if it were trading at $450, you would exercise the option, and give the seller of the option $200 per share for 100 shares of LNUX. Which you could then sell for $450. In theory it sounds good, but almost all the time, the only person making money with options is a broker involved in the deal.

    To qualify for IPOs, most brokers require that you be experienced enough to purchase/sell options. But I don't recommend it.

    Sometimes, by holding a stock, you will receive (gratis) options regardings that stock or in another stock held by that firm. I get those about every month or two, and I usually let them expire, because they're usually worthless from my viewpoint. But, sometimes, they are worth exercising or at least selling.

    At this point, you might want to just wait for the stock to engage in the classic post-IPO dip. Look at the RHAT chart and you'll see what I mean. It won't be for $45, that's for sure, but it might dip below $100 if you're patient. Don't wait till Jan 15, 2000, because they should have 4Q results by then, and the stock will go ballistic.

  • The Canadian government prevented me from buying my shares. I was prepared to pay $31x100 US, and I would have made, well, around $27,000 US. Well. Thanks to my government, I am unable to participate. I have never been so angry with this country. Time to take up anarchism. Someone find me a rock.
  • by Booker ( 6173 )
    Nope, didn't sign up. You mean you just put in your email? Are you running a project? *sigh*

  • by bgdarnel ( 2144 ) on Thursday December 09, 1999 @08:53AM (#1471780) Homepage
    From the VA letter itself:

    1...Contributor lists from major Linux or related open source projects.
    These projects included Debian, KDE, GNOME, GTK+, Python the GIMP and
    many others.

    2...VA has a number of Linux Community members in it's ranks, they were
    asked for their input.

    3...To fill in the remainder of the slots for Linux developers, we
    reviewed a number of online source code archives, a complete running
    system, and all of the HowTos (11 gigabytes total reviewed). By measuring
    how many times an email occurred in these files, we graded the "prolifacy"
    of any one contributor and just worked from the top down based on how
    much work any one person had done until we exhausted the number of
    shares available for the program.

  • Just found out that E*Trade had 66,000 shares allocated. So, up to 660 people were lucky. I have not yet heard of anyone who did get lucky. Perhaps multi-millionaires don't hang out on Slashdot.... yet. :)

    From Edgar Online:

    Credit Suisse First Boston Corporation...................... 1,745,744
    Deutsche Bank Securities Inc. .............................. 752,752
    Hambrecht & Quist LLC....................................... 752,752
    Lehman Brothers Inc. ....................................... 752,752
    Bear, Stearns & Co. Inc. ................................... 66,000
    E*Offering Corp. ........................................... 66,000
    Invemed Associates LLC...................................... 66,000
    Charles Schwab & Co., Inc. ................................. 66,000
    SoundView Technology Group, Inc. ........................... 66,000
    Wasserstein Perella Securities, Inc. ....................... 66,000
    Total............................................. 4,400,000
  • but we're talking about signing up for, and getting, the IPO offering price. We're not talking about buying it once it opens.
  • by Booker ( 6173 )
    Listen up, that's what we're talking about - there were some IPO shares available through e-trade. We're trying to find out if anyone got them. We're not talking about buying on the open market...
  • Looking at that page, the way to get "platinum" status is to make 75 trades (that's $1500 in commissions) in 3 months. Then you get to be "platinum" for the next three months, and get a better shot at IPOs.

    This is from the same people who say they're looking for people to buy and hold the IPO shares for a long time.

    SO - make an average of over 1 trade per day for three months, then you're eligible for an IPO. Yeah, they're looking for long-term stock holders, alright...
  • by heroine ( 1220 ) on Thursday December 09, 1999 @09:00AM (#1471809) Homepage
    Write more window managers? Write more device drivers? Red Hat broke $200 in November but how much have we seen result from that? I'm still using Netscape 4 to read this and the same software I was using before the IPOs for all the networking. Red Hat still employes only 7 engineers. I still wouldn't dream of finding a job coding in Linux and the number of people wishing they could code Linux software for a living hasn't changed.
  • by luge ( 4808 ) <> on Thursday December 09, 1999 @09:00AM (#1471818) Homepage
    ... but the stock market will, eventually. Does anyone else think that this "irrational exuberance" (to quote a certain Mr. Greenspan) has gotten ridiculously out of hand? I'm no market expert, but none of this current boom seems to actually be based on actual company value, but rather what people think stock is worth to others. As soon as there is a crisis in confidence (for whatever reason) the bottom will fall out of the market like crazy. I dread to see what happens on that day...
  • by Rabbins ( 70965 ) on Thursday December 09, 1999 @09:00AM (#1471820) tried to negate that as much as possible by offering a "Dutch Auction".

    This method is unlike traditional underwriting methods in that it is set up to avoid these huge first day run-ups... insuring most of it goes to the company (those greedy bastards at :) The idea is to better determine the price of the offering through an initial bidding process with individuals and institutions.

    Funny you mention the tulip bulb mania, because this is where "Dutch Auction" got its name from.

    Needless to say, the method did not work very well as still ballooned up 252% at the opening.
  • This is true:

    I went to my local supermarket and read a sign on the checkout counter:

    "Help wanted, F/T or P/T, stock option available".

    I think it's a good time to liquidate my portfolio and start buying Gold.

    So I'm a bear, so what.
  • VA basically has done their own distribution in conjunction with O'Reilly and SGI; a lightly-customized Debian (basically a revamp of 2.1r3 with the most egregious bugs corrected and updated "boot floppies" for CardBus laptops and the like). It may include the 2.2 kernel as well; I haven't bothered to boot the CD-ROM yet.

    In reviews of their other systems, I've read that they provided a custom version of Red Hat too. I think in that case, the main difference was in the kernel (tuning for the particular configuration, no doubt). But there may have been other changes too...
  • by chrisd ( 1457 ) <> on Thursday December 09, 1999 @09:05AM (#1471839) Homepage
    DB has nothing to do with Etrade. Etrade is thier own animal and DB cannot possibly help you with them.

    Grant Chair, Linux Int.

  • by MeanGene ( 17515 ) on Thursday December 09, 1999 @09:07AM (#1471845)
    As much as I like VA, I don't understand why their valuation should be higher (long-term) than other computer manufacturers. Let's face it: if, say, DELL wanted to become a bigger Linux company than VA, they could do it in a second.
  • What I am trying to come up with is the current operations value of the company.... granted, I ran these numbers a year ago.

    This is an attempt to figure out what would be worth if there were no future growth. Obviously, that is difficult because the company is not makin any money now. So we take away what I would consider to be start up costs (well, at least they certainly call it that).

    10% is a normal operating margin... I would submit that because of the low barriers to entry and competitive pricing nature fo the internet, that it should be much lower... but I gave them that.

    I then believe market value to equal current operation value plus future growth value.... which I did above, figuring on a future growth value of $10.7 billion or so.

    Keep in mind, Amazon's market value is approximately 5 times as much as Barnes Nobles and Borders combined! That figures in for some amazing growth in the future. Around $63 billion in sales per year in about ten years from what I came up with at the time.

    It also seems strange that any company who's cost of capital is 15% who choose to invest that
    capital in further operations that only yeild 10%! What a silly idea. I could (a) take the 40 Million I now own (net of Dividend Payments) and invest it in whatever is generating this 15% cost of capital and earn a healthy 15%, or I can (b) reinvest this money into my company which is generating 10% ROI; I think there is no real choice involved. (For reference, I work for a company who assumes a cost of capital of 8% (this year) and won't allocate budget dollars to a project expected to earn under 16%, and I work for a very conservative company!)

    Yes, you work for a very conservqative company which actually makes money. Maybe we might agree that their business model is a little *flawed*... the whole idea right now is to pump money into operations yielding nothing, or very little. Hoping that someday, sheer volume and name presence can overcome this. Welcome to business on the internet, you can not use common sense.

    VA Linux and have a lot of potential... the point here, is that potential has already been reached in it's stock price, and even exceeded.
  • Jesus Christ. November was LAST MONTH. Do you really think there are boatloads of brilliant OSS programmers who have been sitting around with their thumbs up their arses waiting for a windfalls from distro cmpanies with multi billion dollar valuations before they start programming great works? Were you expecting Xfree 4, the 2.4 kernal, DVD support in 30 minutes or less? Red Hat can't magically get brilliant people over night.

  • Everyone who was in the program and faxed in thier forms is by default confirmed for 100 at 30$. To change your share allotment to 50 or 140 , you must call and tell them.

    Shares will officially in your the account on tuesday, the settlement date.

    You can sell now if you like. Settlement date doesn't change that. To sell, you call the number in your packet, ask to talk to a broker, get the broker's name, tell them your sell order. They will probably hang up on you at this point and will call you back with a confirmation. This is how brokers are. This may seem rude, but it's how thier line of work works.

    At the end of the day (After 5 pst probably) everyone will get an email confirming the deposit of the shares in the account. If you do not geta confirmation email by say 10pm pst, you have my permission to flip out and email me spaztically :-)

    Please read your Q&A again, the bulk of the people calling are asking questions already asked in thier forms. Please RTM, you'll make this so much easier if you do.

    Again, if you have questions , etc, email me [mailto]. I will forward these on to the underwriter.

    You are wasting peoples time if you send mail to me and the broker mulitple times. We are receiving the email, I assure you. Everyone that comes in must be checked against the lists we have and that takes a little while.

    Happy holidays.

    Chris DiBona
    Grant Chair, Linux Int.

  • by poopie ( 35416 ) on Thursday December 09, 1999 @09:19AM (#1471857) Journal

    US stock market nowadays is like some slimy scam! I'm happy that people are getting rich, but it's all insane. People like us aren't the ones that are driving the stock prices crazy, it's the fund managers that are trying to hold on to their jobs, it's everyone and their grandma who is daytrading.

    Here's my main beef: there's no opportunity for anyone to profit from these stocks. They gap open to a price that is WAAAY overvalued, and then the corporate investors take their profits, and the stocks dip by the end of the second day. There is no opportunity for average not-well connected people to "get in" on anything anymore.

    Stocks are priced, but never go on sale for that price. Why not just start pricing IPOs at $300/share???????

    This is not a sustainable model.

    I can see it now: Fund manager to fund manager: "we're getting out of Microsoft and getting into linux - Buy every company that does anything with linux and continue to accumulate all stock that you can get your hands on AT ANY PRICE"

    I'm sorry I missed out on the VA IPO, but jeez... this is just insane!

    Oh well, at least I'm glad that I'm not a not a financial consultant or work for a brick-and-mortar investment firm. Their days are numbered.

    I guess this is good news for opensource... there'll be plenty of linux millionaires that can devote their life to creating 32-bit color icons or ultra-cool widgets, or whatever turns them on without having to worry about making a profit from it.... (or needing to prostiture themselves by writing windows code)
  • According to the latest Wired quotes, VA has a market cap of 10.21B, Compaq is 44.55B, and Dell is 115.79B. So VA's valuation, strictly speaking, is not higher than Dell's. Unless I misunderstand these financial terms, which is quite possible....
  • I was in the same situation, with the additional contraint that I didn't have any money to buy the shares with anyway.
    Remember, though: although the numbers are impressive, it's just paper wealth, fueled by the reality distortion field that is Wall Street. As soon as the bubble pops -- and pop it will -- I expect that most of these companies will drop back to a reasonable level, with some of them falling harder than others.
    I do expect VA to have a better chance than the rest of doing well in the long term (which is what counts), since they actually sell something (as opposed to Red Hat et al, who mainly sell warm fuzzies) But who knows? If I had to peg a high limit for a reasonable jump for VA, I think I'd say double the initial price.
    Disclaimer: I'm not well-versed in the stock market at all, so the above is just conclusions drawn from general knowledge and could be totally wrong; in fact, the probability that they are is rather high.

  • by Electric Eye ( 5518 ) on Thursday December 09, 1999 @09:20AM (#1471862)
    Seems you need a lesson in stocks. Just because the stock is at $200, doesn't mean Red Hat has free access to all those dollars. Shit, the brokers are the ones who make most of the money. All red Hat got was the initial selling price. The rest is pocketed (hopefully this will be changed by law) by those who got in on the IPO and then made them available at the inflated price. RHAT can start selling of a few million shares to get a lot of the $$$, but that's it. They can only do so much.
  • Well, they sent it to everyone on Sourceforge. (Un)fortunately I don't have the kind of money necessary to even consider it.

  • As long as there isn't inflation, I don't see why insanity like this can't continue. If people want to throw their money away at 250 bucks a share, then let them.

    VA Linux is a good company though. With all this money flow, they *should* be able to create a lot of profit. If you hadn't noticed, they are already becoming more than just a generic computer reseller.
  • According to my financial advisor, it is "illegal" for Canadians to participate in an IPO. Canadians have to wait until the company is public before they can buy any shares.

    It really really sucks. I think those VA Linux IPO offer letters sent out to Canadian developers may in fact be asking Canadians to break the law!

    Or maybe I am missing something here? Obviously I have not read the letter, as I don't qualify. Doesn't VA Linux have a legal department?

  • by Chris Siegler ( 3170 ) on Thursday December 09, 1999 @09:13AM (#1471874)

    Very cool. To commemorate their very successful IPO, VA has announced that they will build a limited edition system on par with their StartX ZP workstation called the Dutch Tulip ZP. In the release, VA says that the main difference will be that the limited edition DT ZP will be priced about thirty times what it's worth.

    Maybe I can get VA to send me a test machine for a while? Cool stuff.

  • A way for Dell to create a big presence in the Linux market would be
    to buy a small company with lots of brand name recognition, like, say
    VA Linux. I'm sure that has crossed some investors minds...
  • by hatless ( 8275 ) on Thursday December 09, 1999 @09:16AM (#1471886)
    So let's see. VA's an Intel-based hardware company. They sell the usual ATX-case Celeron PCs, some decent workstation models, and some good-but-not-terribly-innovative servers in the 1-4 CPU range.

    So all the excitement is over the fact that they do a good job of testing and preinstalling Linux on them? That they have a modest services operation that builds turnkey Beowulf clusters? That they employ a few prominent programmers, and do some of their own hardware R+D?

    And once the Dells, IBMs, HPs and Compaqs of the world ramp up support and services organizations for Linux, where does that put VA? VA makes good, speedy machines, but customers that care most about speedy machines want a hardware vendor with a broad product line and a comprehensive support solution. Supporting only one OS on Intel hardware is a bit archaic these days, and VA's 4-CPU top-of-the-line makes them no more a threat to Compaq in the Fortune 500 than Dell is.

    By comparison, Cobalt is a more rational investment. They picked a couple of vertical applications and homed in on them hard.
  • What happens when linux becomes a "standard" option for every pc IBM,dell,compaq,hp,acer, etc etc. ships.

    We are not too far away from the scenario where desktop and linux servers are common place.

    VA Research will tumble, as the linux machine - even high end ones - will be a commodity.
  • As their ticker symbol is LNUX, my guess is that most stock buyers out there think they are buying shares of Linux. The hopelessly uniformed and their money are soon parted...
  • by roystgnr ( 4015 ) <roystgnr&ticam,utexas,edu> on Thursday December 09, 1999 @09:26AM (#1471891) Homepage
    They're not just a beige box builder that added Linux to their name, they actually do know the OS and what kind of hardware to put it on well. When we got a Linux workstation last spring, Gateway considered it a "special engineering" cost of ~$500, Dell charged as much as for NT, and both of them offered a selection of adequate but poorly-selected-for-Linux hardware, going with Adaptec over Buslogic, with some poor video card over Matrox... just basically taking their Windows workstation and slapping Red Hat on instead. I'm sure the big vendors are putting Linux prices in line with reality by now, but they're probably still shipping hardware with reverse-engineered drivers.
  • Unfortunately, their voice mailbox is full.

  • And people who buy into "RHAT" think they're getting a clothing manufacturer? And people who buy "FON" think they're getting every telephone on the planet? * Nobody is that stupid.

    * - Okay. There's got to be one or two numbskulls out there who invest completely upon the name of a stock. But they're so small, why worry about them?
  • Uh, what makes you think that the only shares in existance where those released for the IPO? It would be pretty typical for a company to hold shares back--say 2-4 million for an IPO of this size. Anybody know how many shares are still held by VALinux or it's principals?
  • by Rabbins ( 70965 ) on Thursday December 09, 1999 @09:31AM (#1471908)
    Let me give you an idea of how ridiculous it really is.

    Right now, VA Linux has approximately the same market cap of = $11 billion.

    The reason I am going to talk about Amazon is because I recently ran a model on Amazon... but not on VA Linux.

    Sales in 1998 for were $590 million.
    VA Linux had $14 million.

    For both companies, we can assume an operating margin (profit) of about 10% (Both are in highly competitive areas, with VA Linux having significantl higher barriers to entry). This will give us abou $40 million in net opertating income after taxes for (exluding startup costs). Assuming absolutely no growth out of, what would $40 million over the next 10 years be worth?

    To get that number, we need a discount rate, or the cost of capital needed to generate those earnings. Because the stock is volatile, we assume a high cost... 15%.
    Divide $40 million by 15% which gives us $270 million.

    With no future growth, this is what would be worth ten years from now $270 million Which equals about $2.25 per share.

    Obviously, investors are betting that Amazon *IS* going to be growing over the next ten years... but let's find out how much they are betting on ti growing:

    Simply subtract $270 million from the current market market value ($11 billion), which gives us $10.7 billion roundly. How much do they need to grow? Well, by putting these numbers into our handy financial calculators we come up with an average annual return of 59.6% a year for ten years assuming margins of 10% and a 15% capital cost. Is this unrealistic? You bet.

    Another way to look at it:

    Barnes & Nobles and Borders together generate about $5.3 billion in sales with a scant 2% profit margin. People buying right now, are betting that they will completely run Brders and Barnes & Nobles out of business, as well as succesfully stealing a ton of market share from other business areas it is entering into.

    Well, VA Linux generates even less revenue than yet is valued just as high. Throw in increased pressure from IBM, Sun Microsystems, Compaq and Dell, and you are looking at a company with absolutely no room for error.

    Good luck :)

  • by the eric conspiracy ( 20178 ) on Thursday December 09, 1999 @10:31AM (#1471910)
    Here's my main beef: there's no opportunity for anyone to profit from these stocks.

    There is plenty of opportunities to profit from these stocks. Take a look at the Redhat charts and you will see that there has been lots of opportunity for an investor to make damn good money from Redhat even if you were not in on the initial IPO. In late Sept RHAT was around 60, and the same in late Nov. Now it's around 300.

    The same has been true for Apple, Dell, AOL, Yahoo, Cisco, Microsoft and any of the technical stocks on the US market. I expect that VALinux will have its ups and downs too.

    In any case the REAL way for an individual to make money in the stock market is not with IPOs or short term trading that is little more than gambling. It's to put your money into the market on a regular basis into a basket of good companies, and keep it there for 40 years. No other investment does better over the long haul. With dividend reinvestment you can count on doubling your money every 7 years or so. Over a 40 year working career that adds up to a VERY comfortable nest egg.

    The traders that are playing games with VALinux today are not the fund managers - they are the day traders that are playing all sorts of momentum games. They will also be riding the stock on the way down, too. Right into the psycho ward, assuming they don't go postal first. When it bottoms out, the fund managers will start nibbling.

    The good thing is that companies like VALinux can use this money to help build open source.

    Oh well, at least I'm glad that I'm not a not a financial consultant or work for a brick-and-mortar investment firm. Their days are numbered.

    I really disagree with this. As the boomers retire there is going to be a lot more need for intelligent asset management. Along with a variety of medical products, resort real estate and similar services for the old folks, it's the boomers that are and will continue to the largest force in the overall economy.

  • LEast I can do..

    Call the 415/800 number (either of them should be fine) and ask them.

    Chris DiBona

    Grant Chair, Linux Int.

  • In general, I agree with your very perceptive assessment (somebody moderate his comment up, please), but I confess that as a Capitalist and Linux goon, I'm a little confused by the last bit:

    On another note, I find it laughable how the linux goons are trying their damnedest to cash in. I guess communists would abandon their ideals for a wad of cash given the chance.

    I'll admit I don't like Socialism or Communism very much, but I don't think characterizing "linux goons" as communists (and by extension, Free Software as being inherently communistic) is very fair or accurate. Many of us are capitalists who have ethical concerns about taking unfair advantage of situations of universal zero marginal cost.

  • If I were them, I'd put some serious cash into the following:

    1. First and foremost, web browser development. Put some serious capital behind the Mozilla project, to make up for the lack of support from Netscape/AOL. As Dave Whitinger pointed out, losing the Browser battle could lose us the War []. Mozilla has the potential to be a much better browser than Internet Explorer, especially once it becomes XML and SGML compliant. If you can build perl and python interpreters into Mozilla, you have an IE slayer.
    2. Linux Laptop development. Linux is a pain in the rear when it comes to laptops; if VA could start selling them commercially, they would have a virtual lock on the market.
    3. Start putting some major capital into open source office suites like KOffice [] or GNOME Office []. This is much less necessary than (1) or (2) since there already exist excellent office suites for Linux (including StarOffice), but it may still be a very good idea just-in-case Sun decides to pull the plug on Linux support, in favor of (say) Solaris 8 for Intel.

    The Kulturwehrmacht []
  • by SurfsUp ( 11523 ) on Thursday December 09, 1999 @10:34AM (#1471917)
    And then put QT under GPL, removing once and for all what may be the biggest question mark in the open source world.

    Like all the other linux IPOs, VA needs to beef up its assets by acquisition before the blush fades. Troll Tech would be a high profile, community-oriented acquisition that would have the immediate effect of boosting VA's market capitalization yet further. This would be a far more satisfactory arrangement that, for example, Troll tech winding up as a division of Red Hat, which already has a lot of influence over Gnome. We have to watch out for too much concentration of power on the commercial Linux side, and we have to let our desires be known.

    Corel should also be thinking about making this move.

    Looking into my crystal ball, I see flocks of bankers bearing bags of money camping out on a certain doorstep in Norway...

System checkpoint complete.