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VA Linux Systems gets more financing

The computer maker raises another $25 million in investments from SGI, Intel, Lehman Brothers, Sumitomo Corporation, and others as it considers going public.

Computer maker VA Linux Systems has raised $25 million in investments from SGI, Intel, Lehman Brothers, Sumitomo Corporation, and others, the company will announce tomorrow.

The investments, the company's second round, likely fuel VA's preparations for an initial public offering, which the company is considering, said chief executive Larry Augustin in an interview earlier this month.

In addition, the investments indicate the partnership direction SGI will take in introducing its Linux servers based on Intel chips. The company has said only that it planned to release the servers this summer, but sources have reported the company is placing a heavier emphasis on using Linux instead of Microsoft Windows NT.

Linux, a Unix-like operating system, is closer to SGI's historical expertise with Unix, but the company is putting Windows into its product lineup as well as part of its plan to move to growing markets.

VA declined to comment on the new investments.

VA already won investment from Intel earlier this year so the company could make sure the Unix-like operating system would be ready for release at the same time as Intel's upcoming 64-bit chips, due in the second half of 2000.

Along with Intel, SGI, Sumitomo, and Lehman Brothers, the $25 million investment includes funding from W.R. Hambrecht and Company, IDG Ventures, Sequoia Capital, and Presidio Venture Partners.

The investments are the latest news in the growing financial support for Linux companies, a notable achievement for products based on an operating system that's free and nonproprietary.

Linux seller Red Hat filed for an IPO earlier this month, and its competitor Caldera Systems is considering a similar move. In addition, Linux technical support and training company LinuxCare has won investments from noted venture capital firm Kleiner Perkins Caufield and Byers.

The Linux computer maker has been beefing up its staff, growing from 17 to 145 in since December and hiring a new chief financial officer, a move that sometimes presages an IPO. The new CFO, Todd Schull , who formerly was vice president of finance at electronics manufacturer Solectron, only one of several new hires. VA also snapped up John "maddog" Hall, who has advocated the Linux operating system for years, first from within Digital Equipment Corporation, then with Compaq, as well as Joey Hess and Sean Perry from the non-profit Linux seller Debian.

VA isn't the only company in the Linux hardware business, but it does boast a more serious software and hardware research lab than most other Linux computer manufacturers--not to mention the notable investments.