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LinuxPlanet: On Linuxcare; Firm Announces Layoffs, Cancellation of IPO

May 04, 2000, 14:18 (7 Talkback[s])
(Other stories by Kevin Reichard)

"It saddens me when a Linux company is going through financial woes, especially high-profile firms like Linuxcare, which announced yesterday that it was laying off staff members and downsizing to 70 employees. At the same time, Linuxcare withdrew its application for an IPO, leaving the company's future in serious doubt; don't be surprised if Linuxcare is sold in firesale fashion to Red Hat Software or VA Linux."

"But I hate to admit that this development is not surprising. Anyone who hung around the Linux world could see that Linuxcare was burning through a lot of cash in some dubious ways: last year Linuxcare lost $21 million and generated just $3 million in revenues. The original idea behind Linuxcare was sound: provide Linux expertise to corporations that had none. Good idea, but one that requires a sales infrastructure to go into these corporations and make the sale. Somewhere between concept and execution the need for sales expertise was ignored, and it seemed as through the company felt that if they put out a cool Web site there was no need for an aggressive sales force; customers would just flock to Linuxcare."

"...Linuxcare seems to be a lot of ideas that don't necessarily add up to a business plan. One problem with Linuxcare is that a sales force would have a hard time finding something tangible to sell, since all Linuxcare seemed to offer was general Linux expertise. By trying to offer a variety of services and excelling in none, Linuxcare diluted its brand. Is Linuxcare a software-development firm, a training firm, an outsourced support firm, a certification firm, or a Linux system-integration firm? A company of 130 employees just can't be all of the above..."

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