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Caldera seeks IPO help

Linux seller Caldera Systems is out shopping for investment firms to help it with an initial public offering, and sources say the leading contenders are Goldman Sachs and Morgan Stanley Dean Witter.

Linux seller Caldera Systems is out shopping for investment firms to help it with an initial public offering, and sources say the leading contenders are Goldman Sachs and Morgan Stanley Dean Witter.

Sources familiar with the company's plan said several investment banks have approached the company, including Goldman Sachs, Morgan Stanley Dean Witter, SG Cowen, and Hambrecht and Quist. Merrill Lynch also approached the firm in 1998, sources said.

Red Hat, the first Linux seller out of the gate, went public in August, raising $84 million and seeing its stock soar from $14 a share on the first day of the IPO to its current price of 88.69. Goldman Sachs was one of Red Hat's underwriters.

The Linux operating system is a clone of Unix, first created by Linus Torvalds, then a Finnish graduate student. In the past year, the buzz around Linux as an operating system for servers--and more--has grown tremendously.

Caldera isn't the first to catch Linux IPO fever. Linux computer maker VA Linux Systems' plans are imminent, and Cobalt, which makes single-purpose servers using Linux, already announced its intent.

Meanwhile, LinuxOne, a 13-person company founded in March that doesn't yet have a final version of its product, is also trying to get a piece of the action.

Spokespeople for Goldman Sachs, Merrill Lynch, and Morgan Stanley Dean Witter declined to comment for the story. Caldera Systems spokeswoman Nancy Pomeroy said that going public "remains an option, as it always has been. We don't even have a timeline. We are getting our financial house in order so it can be an option at the appropriate time."

However, sources familiar with Caldera Systems' plans tell a different story, saying the IPO is scheduled for the end of November. The company has set aside special stock for the open-source companies that have helped Caldera--the KDE programmers who have improved Linux user interface options and Troll Tech programmers who helped Caldera with its Lizard installation routine.

Though the company has been a bit nervous with recent Microsoft remarks sending tech stocks down, odds are the IPO will go ahead.

Caldera Systems is "something we've been expecting for while," said International Data Corporation analyst Dan Kusnetzky. Caldera systems' software--with its roots connected to former Novell chief executive Ray Noorda--works as a good bridge between Linux and Novell NetWare, acting like a NetWare server and providing NetWare services, he said.

In addition, Caldera Systems has strong ties with companies that tie together Caldera's software with their own, Kusnetzky said.

However, he said, "They need to strengthen their message that makes them a distinctive Linux distributor," he said. "In some cases it's hard to tell what Caldera is doing and why it's different from Red Hat."

Refurbishing Caldera
Last week, the company snared Mike Ballangee away from IBM, Pomeroy said. Ballangee was the person who drove IBM's alliances with several Linux sellers, including Caldera Systems, Red Hat, SuSE, and TurboLinux.

At Caldera Systems, Ballangee is now director of strategic alliances and business development.

In addition, Caldera Systems announced last week that Fujitsu will distribute servers with Caldera OpenLinux and that the two companies will jointly promote the products. In addition, Caldera will provide back-end technical support to Fujitsu Linux customers as well as train Fujitsu personnel in Linux.

The deal will give Caldera a foothold in the Japanese market, where TurboLinux currently dominates, according to market researchers.

In the longer term, Fujitsu and Caldera Systems "will work together to move OpenLinux Server Edition to laptops, PCs, personal digital assistants, and more." Specifically, the companies are eyeing cell phones and appliances that connect to the Internet.