Linuxcare's IPO Becomes Clearer

by David Penn

Linuxcare revealed in an amendment to its S-1 filing to the Security and Exchange Commission that it plans to sell 4.5 million shares of common stock at $13 to $15 per share in its upcoming initial public offering (IPO).

Underwritten by Credit Suisse First Boston, Chase H&Q and FleetBoston Robertson Stephens, Linuxcare's IPO is expected to raise around $56.6 million, which company officials say will be spent on operating losses and expansion (including possible acquisitions) as well as sales and marketing.

With shares priced between $13 and $15, Linuxcare could wind up with a market capitalization of between $392.6 and $453 million. This is sizeable, but still smaller than two Linux IPO heavy-weights in Red Hat (market cap $8.5 billion) and VA Linux (market cap $4.3 billion).

"Market capitalization" refers to the total dollar value of outstanding stock in a given company. Essentially a measure of a company's size, market capitalization is determined by multiplying the number of outstanding shares times the current market share price. After its IPO, Linuxcare will have approximately 30 million shares outstanding.

Linuxcare expects its shares to be listed on the Nasdaq exchange under the symbol LXCR.

Linuxcare was in the news recently, offering to support the opening of the Windows source code should the Redmond monopoly and its antagonists conclude that open sourcing the Windows source code is a preferable alternative to breaking up Microsoft into what has been referred to as "Baby Bills". While some have called the Linuxcare offer simply a measure to upstage the unveiling of Microsoft's Windows 2000 operating system, Linuxcare's executive vice president and co-founder, Art Tyde, said in a statement: "Linuxcare is ready to support Windows as true open-source software. We recognize that it would be a massive undertaking to wade through 35 million lines of code, but we are up to the challenge if Microsoft decides to take its chairman's comments seriously."

"Its chairman's comments" refers to statements made by Microsoft chairman Bill Gates during which he allegedly said that Microsoft would be willing to open the source code for Windows as part of a settlement with the Justice Department's antitrust case. The veracity of the statements has been contested, however, with Gates himself claiming he never said he would be willing to give up the source code for Windows.

All the same, Linuxcare's offer still stands. As Mr. Tyde put it, "should Microsoft decide to open source its Windows code, we believe the worldwide community of software developers will help make it a better product."

Linuxcare was also in the news recently with announcements of new offices in Germany and Japan.

email: david@ssc.com

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