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Merging Turbolinux, Linuxcare announce layoffs

The Linux seller and Linux services company, set to merge soon, announce staff cuts.

Linux seller Turbolinux and services provider Linuxcare both announced layoffs Friday, shortly before the companies plan to merge and two days after Linux competitor SuSE trimmed its staff.

The layoffs affected staff across all divisions of Turbolinux, said Jerry Greenberg, who was hired as senior vice president of marketing late last year. He declined to say how many employees had been laid off.

Linuxcare laid off 10 percent of its staff, mostly in administrative jobs and technical support, said spokeswoman Michelle Nemschoff. Though she declined to say how many people lost jobs, Chief Executive Art Tyde has said in recent months the company has about 150 employees, meaning the layoff would affect about 15.

"We used to double revenue every quarter. (But) the expectation of revenue was a little too aggressive," Greenberg said. "We were overstaffed."

In May, Turbolinux laid off 52 employees. At the time, it had about 325 employees. In September, the company had 253 employees, it said in a filing with the Securities and Exchange Commission.

For the six months ended June 30, Turbolinux had $2.9 million revenue, a 66 percent increase over the $1.8 million from the same six months of 1999. Turbolinux now expects growth rates to be about 35 to 40 percent, Greenberg said.

In addition, there is duplication with some of the staff at Linuxcare, a company Turbolinux is in the midst of acquiring. Though sources earlier said executives likely will lose their jobs as a result of the acquisition, Greenberg said on Friday that "the key management teams supplement each other."

The Turbolinux layoffs come two days after German Linux seller SuSE laid off most of its North American staff.

San Francisco-based Turbolinux also competes with Red Hat, the dominant Linux seller, and Caldera Systems.

Greenberg said programming staff wasn't affected by the layoffs.

However, the company has lost some of technical staff recently, including Samba programmer John Terpstra, who moved to rival Caldera Systems, and Peter Braam, a Linux file system programmer who along with former Turbolinux Chief Executive Cliff Miller founded Mountain View Data.

Turbolinux filed to go public in October, hoping to raise about $60 million. However, the plans outlined in that S-1 filing likely will have to be updated with the Linuxcare acquisition and the diminished revenue growth projections.

Turbolinux Chief Executive Paul Thomas still will continue in his current job and will lead the combined company, Greenberg said. Day-to-day running of the company will be taken over by Ly-Huong Pham, who has been promoted from executive vice president of worldwide development to chief operating officer.

"There is no current plan to pull the S-1," Greenberg said. "We have no second round (of financing) planned."

The company hopes this round of layoffs will be the last. "It's our expectation. But in this industry, you can't predict what the future will bring," Greenberg said.