"We couldn't be happier," said chief executive Ransom Love in an interview with CNET News.com after the company's first day of trading concluded. In its first day as a public company, Caldera Systems' stock closed at $29.44 per share, a 110 percent increase over the IPO price of $14. The company now has a market capitalization of $1.1 billion.
Although Caldera didn't rise as quickly as other Linux IPOs, Love maintained that the trajectory shouldn't be seen as a cloud on the company's future.
Caldera Systems' increase of 110 percent was less than earlier Linux companies; shares in Linux seller Red Hat jumped 272 percent in its first day of trading in August. Shares of special-purpose server maker Cobalt Networks surged 482 percent during its first day in November. Andover.Net, a Web site for Linux programmers and other technically savvy people, jumped 250 percent in its first day in December.
And VA Linux Systems, a Linux computer maker that is acquiring Andover.Net, set a record 698 percent gain in its first day.
Despite the performance differences, Caldera plans to follow in the footsteps of other publicly traded Linux companies that have used their high stock valuations to acquire other firms in an effort to expand as quickly as possible, Love said.
Acquisitions will help Caldera address several key growth areas: improving ease of use, adding management software, selling e-commerce products and expanding into Asia and Europe.
Caldera sells two versions of Linux, one for desktop computers and one for servers, and will begin selling e-commerce software called eBuilder in late April. Linux is collaboratively developed by a host of programmers, many of them volunteers but an increasing fraction at companies such as SGI, IBM, Red Hat and VA Linux Systems.
Linux is a clone of the Unix operating system. It competes with Windows as well as with Unix itself. After existing for years mostly as a hobby of programmers, it rapidly moved into the product
at a glance
HQ: Orem, Utah
CEO: Ransom Love
Annual sales: $3.1 million
Annual income: ($9.4 million)
Market cap: $1.05 billion
Date of IPO: 3/21/2000
Of the 5 million shares of Caldera Systems stock that went on the market today, 10 percent went to open-source programmers and Caldera Systems business partners through a "directed share" program, Love said. This type of program allows more people to buy the stock at the IPO price, in this case $14, which allows for a tidy profit if the stock rises substantially during public trading.
Red Hat pioneered the directed share concept to reward the collaborative Linux programming effort, but the company took its lumps when not everyone who wanted to participate was allowed to. Later revisions from VA Linux Systems improved the participation rate but ran into issues such as participation by foreign nationals.
Love acknowledged the imperfections of the system. "No matter what you do, you try to get everybody, and it just seems like that's a very difficult thing to do," he said. "Because of our business focus, there are many value-added resellers we're trying to bring in as well as the development community, as well as friends and family. It's quite an interesting thing to juggle."
"It's not the best environment to go public in," he said.
One of the risks disclosed in the company's filing is the 73 percent stake founder Ray Noorda holds in the company. "Mr. Noorda could elect all of our directors, delay or prevent a transaction in which stockholders might receive a premium over the prevailing market price for their shares and control changes in management," the company said in its Securities and Exchange Commission filing. Noorda was chief executive of Novell in the network software provider's heyday.
Love defended the company founder, though. "Clearly, Ray has been an industry luminary. He was involved in Linux when people couldn't even spell it," Love said. "It's kind of a vindication for Ray."