Linuxcare plans to raise $56.6 million in IPO

The small Linux services company plans to raise at least $56.6 million in its initial public offering, although it admits it is not likely to see profits until 2002.

Stephen Shankland Former Principal Writer

Stephen Shankland worked at CNET from 1998 to 2024 and wrote about processors, digital photography, AI, quantum computing, computer science, materials science, supercomputers, drones, browsers, 3D printing, USB, and new computing technology in general. He has a soft spot in his heart for standards groups and I/O interfaces. His first big scoop was about radioactive cat poop.

Shankland covered the tech industry for more than 25 years and was a science writer for five years before that. He has deep expertise in microprocessors, digital photography, computer hardware and software, internet standards, web technology, and more.

See full bio

Stephen Shankland

Jan. 2, 2002 4:43 p.m. PT

2 min read

Linuxcare, a small Linux services company, plans to raise at least $56.6 million in its initial public offering, although it admits it is not likely to see profits until 2002.

The latest Linux company with plans to go public, Linuxcare sells technical support, customization, education and other services. It's one of a handful of the most prominent Linux companies, along with Red Hat, VA Linux Systems, Caldera Systems, TurboLinux, SuSE and Corel.

Linuxcare will sell 4.5 million shares priced between $13 and $15 apiece, the company said in a Securities and Exchange Commission filing this week. At a share price of $14 and including the possible sale of over-allotments, Linuxcare could raise, in the aggregate, as much as $65.3 million.

The company had pro forma revenues of $1.5 million for the year ended Dec. 31, with a net loss of $21.3 million, according to the filing. Because of aggressive expansion plans, which will cost $65 million this year, Linuxcare will remain unprofitable through 2001, the company said.

Though investor hype has driven several intensely hot Linux IPOs, the prices of most of those stocks have slipped after the initial trading frenzy.

Being unprofitable while carving out as large as possible a market share in a new area is nothing new. The technique was pioneered by Internet companies, many of which still aren't profitable.

A lack of profits has been a characteristic for Linux companies as well. VA Linux Systems, a Linux computer maker that went public in December and set the record for a first-day stock climb, doesn't expect to be profitable until the end of 2001 or beginning of 2002.

Also like VA, Linuxcare is looking to expand its customer base so it's not as dependent on a small number of companies. The company said in the filing that more than half of its revenues in the last year came from three companies: 26 percent from Sun Microsystems, 18 percent from Motorola, and 11 percent from Silicon Graphics.

Of the roughly $56 million it expects to raise, Linuxcare plans to spend $32 million on sales and marketing and $19 million on information technology in 2000, the company said.

Linuxcare plans to trade on the Nasdaq market under the symbol "LXCR." The IPO is being underwritten by Credit Suisse First Boston, FleetBoston Robertson Stephens and Chase Securities.