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Linux Journal: IPOs and More IPOs

Oct 05, 1999, 03:06 (0 Talkback[s])
(Other stories by Phil Hughes)

"In August, Red Hat did their IPO. While it is impossible for a bricks-and-mortar business plan to explain the current stock value of about $7 billion, there is a big difference between the perceived value of bricks-and-mortar companies and Internet-related ventures. After all, the stock market is, in a sense, legalized gambling for the white-collar class, and they are more excited about a big "maybe" than a small "sure thing..."

"We can compare Red Hat to Caldera and SuSE, because they all ship the same product. That is, it could be exactly the same, but each has elected for a different market segment and has made some differences. As far as revenues, SuSE is roughly the same as Red Hat; that is, about $10 million. I don't have revenue numbers for Caldera, but would expect them to be somewhat smaller. Caldera has its own market segment--the VAR--which is likely to be where they experience significant growth, and their recent announcement about Lineo, their other division (working on Embedded Linux), should firmly entrench them in that area as well..."

"What may make the biggest difference is timing. Red Hat did their homework, got themselves to look like the biggest thing going and entered the market when many buyers didn't really understand that they were just one of the flavors of a system that could compete with Microsoft. It is likely that SuSE and Caldera investors will do more homework before they buy. I would guess this would limit their value growth, but I'm also the guy who didn't expect Microsoft to be taken seriously when they started selling an OS they bought from another company about 15 years ago."

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