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VA Linux seeks $66 million in IPO

The maker of Linux-based computers plans to sell its shares for up to $13, possibly a bargain considering the stunning success of other Linux-related offerings.

Linux computer maker VA Linux Systems plans to raise as much as $66 million in an initial public offering, the company said today.

VA has been selling Linux computers since being founded in 1995 and is expanding into selling services such as technical support and consulting. The company aims to combine the customization abilities of Sun Microsystems and the manufacturing efficiency of Dell, Brian Biles, vice president of marketing, said in an interview today.

In a registration statement filed with the Securities and Exchange Commission today, VA said it intends to sell 5.06 million shares at $11 to $13 apiece.

If the success of Red Hat or Cobalt is any indication, that price could prove to be a bargain. Cobalt, a maker of Linux-based special-purpose servers, priced its shares at $22, raising $110 million. When the shares went public earlier this month, they surged to 128.13 in the first day.

Red Hat, the first Linux company to go public, raised $84 million after selling its shares for $14. In their first day of trading, the shares reached 52.06 and have continued to rise. Red Hat shares climbed 3.5 percent today to close at 105.38 after the company said it plans to acquire Cygnus Solutions.

VA is aiming for the high end of the marketplace-- server computers, where Linux is popular because of its close ties to Unix.

Although VA sells servers and has close ties with Intel, it doesn't sell eight-processor systems based on Intel's "Profusion" chip set, Biles said. The demand is for less high-end machines, which often are stacked in racks to serve Web pages for companies such as Akamai and eToys. VA last week introduced a new two-processor machine for such services.

VA also is managing an effort called Trillian to bring Linux to Intel's upcoming 64-bit chips.

VA had revenue of $15 million for the quarter ended October 31, compared to $2.4 million during the same period in 1998. It posted a net loss of $10 million for the most recent quarter, up from a loss of $97,000 last year, the company said in its filing.

VA filed to go public in October. The company plans to trade on the Nasdaq market under the symbol LNUX. The underwriters are Credit Suisse First Boston, Deutsche Banc Alex. Brown, Hambrecht & Quist and Lehman Brothers.

Intel, SGI and others have invested in VA.