Linuxcare plans to go public

The start-up is the latest unprofitable Linux company to file plans for an initial public offering, hoping to raise about $92 million.

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Stephen Shankland
3 min read
Linuxcare has become the latest unprofitable Linux company to file plans for an initial public offering, hoping to raise about $92 million.

The company sells various services based on Linux, an open source clone of the Unix operating system and a competitor to Microsoft Windows. Linuxcare's services include customization, installation, certification that hardware will run with Linux, training, and technical support.

"Our objective is to become the leading provider of Linux-related services," Linuxcare said in its filing with the Securities and Exchange Commission. The company competes vigorously with Linux software seller Red Hat, the first Linux company to go public, and to a lesser degree with VA Linux Systems, a hardware maker.

For the nine months ended Sept. 30, Linuxcare had revenues of $518,000 and a net loss of $10.4 million. A lack of profits is common among the Linux companies, which have spent a lot of money on research and development, acquisitions, and other expenses in hopes that they'll secure a key place in what they perceive to be a growing market. Linuxcare has less revenue than Red Hat or VA Linux Systems, however.

Linuxcare plans to trade on the Nasdaq market under the symbol "LXCR." Underwriters of the IPO are Credit Suisse First Boston, FleetBoston Robertson Stephens and Hambrecht & Quist.

Linuxcare's announcement is the second in which a Linux company has revealed IPO plans on the heels of a major round of investment. Caldera Systems filed its IPO plans the same day it announced $30 million in corporate funding. Linuxcare received $32.5 million in mid-December.

The announcement may indicate a change of philosophy at Linuxcare, which earlier indicated that it didn't expect to go public any time soon. But its competitors have increasing amounts of money to spend on expansion, and some analysts have said the current Wall Street fondness for Linux may not last.

Investors are indeed throwing money at Linux companies. Not only do Red Hat, VA Linux Systems, Cobalt Networks and Andover.Net have high valuations, but companies expected to go public later this year, such as TurboLinux, have raised tens of millions of dollars from corporate investors.

Linuxcare revealed details Tune in to CNET News.com TV's IPO Forecastof its plans in the filing. For one, it has worked to develop Linux so that it is compatible with chips from Hewlett-Packard, Intel and Motorola. For another, it's working on a project called ET-Linux, a variant of Linux designed for use in small, limited-purpose devices.

The filing also confirms that Linuxcare has aspirations to provide services with other open source projects besides Linux. Linuxcare's chief executive told CNET News.com in an earlier interview that the company was considering changing its name to "Opencare."

In open source programming, the underlying blueprints of software are freely shared among a large pool of developers. Other open source projects Linuxcare is working on include the Emacs text editor, the Apache Web server, the Samba file and print server software that fits into Windows networks, and the Majordomo software for running Internet mailing lists.

Oracle, Sun Microsystems, Dell and Motorola are investors in Linuxcare.