Should you be in on Be Inc.'s IPO?

Be Inc.'s (Proposed ticker: BEOS) regulatory filings are rife with reasons not to be interested in its IPO, especially since Linux seems to be getting all the "alternative operating system" buzz lately. Be is offering 6.9 million shares expected to price Monday between $8 to $10.

Be shares are expected to trade Tuesday.

The initial public offering is being underwritten by Volpe Brown Whelan & Company. Net losses were about $7.8 million in 1996, $10.4 million in 1997 and $16.9 million in 1998. As of March 31, Be had an accumulated deficit of approximately $54.6 million.

Founded in 1990, Be has 93 employees. Revenue for 1998 was $1.2 million. In the first quarter, revenue was $309,000.

The BeOS, which had a lot of buzz just a few years ago, was designed as an alternate operating system that would maximize multimedia performance across multiple processors, with native support for the Internet's TCP/IP network protocol built in. It was once thought to be a formidable foe of Windows. Be was also a rumored acquisition target for Apple Computer Inc. (Nasdaq: AAPL), which bought Steve Jobs ' NeXT Software instead in 1996.

Be recently has had a much lower profile and that fact may hurt its IPO chances. "I haven't heard any buzz about Be," said Tom Taulli, an analyst with Edgar Online. "It's an operating system company and there's not a lot of hope for that business."

Be, which has been adding Pentium III and other capabilities, has also been losing mindshare to Linux, which is supported by a host of heavyweights and Red Hat Software Inc.

Be, however, is the operating system behind the ultra-cheap $199 iToaster PC from Microworkz.com. Playing at that low price point, however, could be dangerous. "In our effort to increase market acceptance for BeOS, we may forego near-term revenue by providing BeOS at little or no cost to potential users," the company said.

Though Be hypes the BeOS as "the operating system for the broadband digital media age," its regulatory filings admit "we have only one product that may never gain broad market acceptance." The company, based in Menlo Park, California, also cites a host of other warnings in its filings with the Securities and Exchange Commission.

Taulli said Be's many incarnations could make investors nervous. "They've refocused, but they've lost a lot of momentum," said Taulli.

There is a lack of commercially available software developed for use on BeOS, and "consumers and OEMs may not perceive any significant advantages over traditional operating systems such as Microsoft Windows, Apple's Mac OS or the UNIX-based operating systems," the filings said. Even if they do, "enhancements and features could be added to Microsoft's Windows operating system and Apple's Mac OS which could significantly decrease the differences between BeOS and these operating systems," the company said.

And then there are other risks cited by Be. "Sales to one customer accounted for a significant portion of our net revenues, the loss of this customer could adversely impact our net revenues," the filings warn. Sales to Plat'Home Co. Ltd., Be's Japanese distributor, accounted for about 23 percent of net revenue for the three months ended March 31, 1999, and about 40 percent of net revenue for 1998.

To date, the company has "not generated any significant revenues from sales of BeOS," making it difficult to evaluate the company's business. Earnings aren't even on the horizon, considering the expenses of plans to "expand our sales force and the number of resellers and distributors carrying BeOS domestically and internationally."

The company also faces intense competition from companies such as Microsoft Corp. (Nasdaq: MSFT), Oracle Corp. (Nasdaq: ORCL), Apple Computer, Inc. (Nasdaq: AAPL) and Spyglass, Inc. (Nasdaq: SPYG), which already have operating systems that "are being used or may be used for Internet appliances."