VA Linux IPO price nearly doubles

VA Linux Systems nearly doubles the price range of the stock it will sell in its initial public offering scheduled for Thursday, as demand for Linux stocks has been particularly hot.

Stephen Shankland principal writer
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Stephen Shankland
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VA Linux Systems today nearly doubled the price range of the stock it will sell in an initial public offering expected for Thursday.

The company expected to sell 4.4 million shares at a price between $11 and $13, but today raised the price range to $21 to $23, according to a Securities and Exchange Commission filing.

The change means that VA Linux could raise as much as $101 million in its IPO, instead of the $57.2 million that would have been the case at the previous price of $13.

Andover.Net also raised its price range. It originally expected a range of $12 to $15 per share but raised the range to $15 to $18. The company last night priced the shares at $18, meaning that the company hopes to raise $72 million instead of $60 million. The increase bodes well for the OpenIPO process, which has fallen flat the two times it's been used before.

Such increases in the price range generally indicates high demand for the stock. It's not a surprise, given the successes of Linux-related IPOs such as Red Hat and Cobalt Networks, both of which increased their offering prices. Cobalt's stock today is at 133.

Red Hat's stock surged to an all-time high this week on news Dell will use Red Hat to provide support for its Linux servers. Red Hat competitor Linuxcare has had the contract.

In addition, Dell said it would install Red Hat on its entire server line instead of just selected models. Red Hat's stock today surged as high as 284.63, a 52.50 point boost, putting it up 22.62 percent for the day.

VA Linux Systems makes Intel-based servers using Linux, a clone of the Unix operating system. The company plans to trade on the Nasdaq market under the symbol "LNUX." Investment banking firm Credit Suisse First Boston is the lead underwriter.

Dell has added Red Hat as a choice for service on its server models but hasn't displaced Linuxcare, said Linuxcare's Art Tyde. In addition, Linuxcare still provides support for Dell's desktop and workstation computers, he said.

Andover.Net, a site with programming and news about Linux and other software, also is scheduled to go public this week.

And eSoft, a maker of Linux-based server appliances, also has seen its stock soar on an investment from Intel. The stock of eSoft is at an all-time high of 38 today.

Corel is another company that gets a boost every time investors fuel another Linux stock trading frenzy. Its stock rose to 22.69 today, an increase of 29 percent and an all-time high closing price.

Perversely, though, Cobalt Networks stock went down 2.2 percent to 135, even though its stock also has been swept to lofty heights by the Linux investment craze. And the drop occurred despite the fact that Cobalt annonced that France Telecom would purchase Cobalt servers to provide French schools with Internet access.