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Business Week: VA Linux: Its IPO Could Be Hotter Than Red Hat's

Dec 07, 1999, 16:22 (1 Talkback[s])
(Other stories by Sam Jaffe)

"Far from another overhyped Linux stock, VA has a distinct edge. It actually sells something."

"As if the craze for Internet initial public offerings weren't enough, Wall Street has gone gaga for companies that support the variation of Unix operating system software called Linux. It started with the August IPO of Red Hat (RHAT), whose stock has since advanced 480%. That provided enough momentum for a company such as Cobalt Networks (COBT), which has a tenuous connection to Linux, to jump nearly 50% on its first day of trading, on Oct. 9."

"Despite the endless optimism of stock hypesters, most Linux companies have a big flaw: The software on which they base their businesses is nonproprietary and, most troubling, free. Technically, it's owned in part by any developer who has added a wrinkle to it and then, as a condition of getting the software for free, has posted the changes on the Internet. Linux will thus be an eternally evolving operating system that's essentially in the public domain. A well-managed company can probably figure out how to make money by selling Linux services and support, but no one has ever earned much doing that, which makes owning shares in Linux companies risky."

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