Feature: After the Red Hat IPO Ball is Over 234
Nothing Succeeds Like Success
by Jay Roseman and Frederick Berenstein
New York, NY - Five years ago, if you asked a Linux hacker if he thought a Linux company would have a market valuation of $5.6 billion by 1999, he probably would have said, "Yeah, right". His pessimistic outlook would not have been because he didn't think Linux had what it took, because everyone within the community knew of Linux's potential value, but because with Linux making money was not the great motivator - lack of money was.
And so, what five years ago might have seemed like an absurdity - here we are. Wall Street, meet the Linux Community - Linux Community, meet Wall Street.
Bob Young and his team have done something that many in the Linux community thought impossible several years ago. And we're not just talking about Red Hat's IPO. There is much more to this story than an IPO.
When any company goes public at $14 and trades within three days over $90 per share, it isn't just Wall Street that notices - everyone does!
IPOs occur every day, so what's so special about Red Hat? Answer: this is a Linux IPO, and it's the only play of its type in the financial markets. So naturally, all arrows point one way. The Linux phenomenon has just begun, and we can expect it to continue.
We should all thank Red Hat for pioneering Wall Street. There was a time when being a pioneer often meant being scalped. On Wall Street being scalped is not taken literarily, although scalpings of a different sort occur daily. Not so with Red Hat, Wall Streets newest sweetheart. As individuals and institutions clamored to own a piece of the first Linux software company to go public, hackers and computer enthusiasts in San Jose acknowledged Red Hat's meteoric rise with a sense of satisfaction. Wall Street has finally discovered what every nerd has known for the past five years: that Linux not only works - it works better!
The fact that Red Hat has shot out of the box quicker than Seattle Slew has been a boon to the Linux community (especially if you are lucky enough to own it), but the real benefit of Red Hat's success is that the entire investment world is saying, "Wow!" What's good about "wow"? Well, on Wall Street "wow' translates to "Holy Cow!" and we all know that "Holy Cow!" means, "Linux is now the worlds domain".
No longer is Linux destined to be the operating system of the knowledgeable few that appear to have this uncanny ability to decipher the secrets of the universe. Or at least it appears that way to middle Americans who only recently unraveled the secrets of programming their VCR. Whether the community likes it or not, Linux has been catapulted into Middle America, and the rest of us will just have to hold our ears as well-meaning Wall Street types pronounce Linux as "linex" and saunter around their offices smirking if it was they who just discovered this "extraordinary new operating system."
The Linux community may not know it, but Linux is now caught in a turbulence that is pulling it into the stratosphere. Whether or not this is a good thing depends on who you talk to. There are those within the community who feel anything that Linux has to do with Wall Street is a parasitic relationship. But it doesn't have to be that way. If we honor the GPL and don't all turn into pigs, it is possible and even advantageous to engage in a symbiotic relationship.
What we have to do is make sure that Linux companies don't take to the skies while the hackers who set the groundwork are left sitting on the sidelines with binoculars in their hands.
When Wall Street grants its blessing, as it has with Red Hat, the entire world notices. In normal business circles Red Hat's performance is cause for celebratory cocktail parties, but somehow cocktail parties and Linux don't seem to mix. Surprisingly, most hackers we have met seem to look at Red Hat and its success with an internal sense of satisfaction, thinking, "I am part of that even if I don't get any monetary benefit from it."
That is what drew us to Linux. It wasn't the prospect of money. When we walked into the San Jose Convention Center last March, which was the first time we attended a Linux conference, it felt like we were meeting an Underdog team that had just won the high-school championship. Missing were the smirks of "I told you so". What we found instead was a community, in the truest sense of the word.
Besides the excitement of the San Jose celebration, we were mesmerized by the $150,000 IBM Beowulf cluster that trounced the performance of a $5.5 million dollar Cray supercomputer using an "off the shelf" Linux distribution. When the challenge was over, and Linux was the victor, the cheers shook the San Jose Convention Center and we got goose bumps watching. At the time, we weren't quite sure what we were watching, but we were swept up in the enthusiasm and found ourselves cheering along with everyone else. What we did know was that this was the cumulation of thousands of programmers making a difference, and proud of it.
We remember the first time we listened to Bob Young saying how he would speak to venture capitalists and explain to them his idea of packaging an operating system that would challenge UNIX and Microsoft and be free to anyone that wanted to download it off the web. We assure you, the venture capitalists may not have laughed in Bob's presence, but that was only out of pity for a man that they thought had gone sorely astray. Who would have thought at that time that Linux would have such an impact?
Some analysts still aren't convinced about Linux's ability to challenge Microsoft. But Red Hat doesn't have to challenge Microsoft; they just have to continue doing what they're doing. (Microsoft, pay attention here!) The Linux community discovered a long time ago that the challenge is with themselves, not Microsoft. Linux doesn't have to knock Microsoft out of the market. It just has to take a larger position in the market. And it has.
This is Linux's honeymoon period with Wall Street. In time, there will be analysts writing Linux's epitaph in their research reports. Linux will be compared to Microsoft in P/E ratios and every other ratio and multiple out there and the truth is that Linux just won't measure up. But analysts haven't yet realized the importance of the "Synergy Ratio." (i.e. one Linux programmer = 50 Microsoft programmers.) They don't realize that there's a community here unlike any they have ever experienced. Imagine the Chairman of Ford putting his arm around the shoulder of the Chairman of General Motors and saying, "great job!" This just doesn't happen in normal business, but it does happen in the Linux community every day.
Wall Street has learned a lot from Red Hat, and it isn't just that Linux may very well be the best operating system going. They've learned that a group of determined hackers could get the world's attention just by doing the right thing. Wake up, Wall Street. Linux has only just begun!
And to the nay-sayers, well, the Linux Community has made it a habit of forcing nay-sayers to eat their hats. Only this time what's getting eaten is Linux's own Red Hat.
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IPOs: More Than Meets the Eye
by an anonymous insider
After the dust has settled and Red Hat emerges from their quiet period they should offer a new training course in Durham: "Linux IPO 101 - A case study."
From what I know of Red Hat and the folks calling the shots, the various blunders and snafus related to the affinity offer and E*Trade were just that, blunders and snafus. These folks have been around the community far too long to allow something like this to transpire if they had any control over matters.
I have a feeling there were a lot of late-night calls trying to make sure that deserving people got a fair shot at shares. I'm also sure that no matter how hard they worked, some folks slipped through the cracks, and that is unfortunate. Let's not lose sight of the fact that they were sincerely trying to do the right thing.
Bob Young collaberated on the first few issues of Linux Journal with Phil Hughes (which partially explains the difficulty in scoring back-issues for #1,2 and 3). Then Marc Ewing hooked up with Bob and they hired a couple of guys fresh out of NC State and started working full-time on a Linux distribution before almost anyone else. There were others at the time (WGS was around, Caldera was coming on the scene, and Pat Volkerding was working on Slackware) but these guys were out there on the bleeding edge. They've always released everything under the GPL or a similar license and provided support to a variety of community projects.
When no one else thought enough to have a Linux-centric conference or show these were the people making sure Linux Expo came together. Donnie Barnes started Linux Expo when he was a student at NC State and Red Hat kept it alive when the NCSU LUG couldn't. Erik Troan was a SunSite maintainer on top of his regular work. These are people who are true believers in the community.
Hopefully other companies who go public can learn from what Red Hat has suffered through. I doubt anyone can get it perfect, there are just too many variables involved. But we can always hope.
For better or worse Linux has made it to Wall Street. Here's hoping it's for the better.
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The Wider Implications
by Robin "roblimo" Miller
I believe we are watching the beginning of a Linux-induced revolution in corporate finance that may be more important than recent Linux-induced changes in the way software is developed and distributed. Why more important? Because this revolution has the potential power to change all business activity, not just businesses directly involved with computers.
Suddenly the phrase "World Domination" takes on a whole new meaning, doesn't it?
Misplaced values (Score:1)
That's not what Linux is about. Money is important, but it's a means to an ends. Inspite of what most Americans seem to believe, it's not an ends. Changing the world of corporate finance doesn't effect the rest of the world all that much. On the other hand, we're fundamentally changing the concept of intellectual property. We're showing the world that better things can come through cooperation and people working together for no reward than through competition and capitalism. It's also, as Richard Stallman says, about freedom. We can now look "under the hood" of all of your software, understand how it works, and even modify it. It's about equality. Now, poor high school students will be able to use the same tools as the richest engineers. Every high school, library and third world country can have access to the world's greatest software. It's also about community and about fun. Any one of these is more important than any changes we'll see in corporate finance.
I hope as the movement progresses, money won't make people don't forget our values, or what we're all about.
- pmitros at mit.edu
Remove emotion from stock prices (Score:1)
That said, nobody except insiders could retire from this IPO.
Seems worth it huh? Do not forget the fun next year filling out Schedule D for Capital Gains.
I found http://www.fool.com/ to be an invaluable resource for people to educate themselves on stocks.
The Motley Fool to me, is the RTFM-HOWTO of Wall Street.
Drop FTP server &| Add 1 proprietary app 2 distro (Score:1)
Two possibilities:
(1) GPL doesn't require Red Hat to run an FTP server. They could just pull the plug. RH CDs, though, could be copied by friends.
(2) RH could write a PROPRIETARY installer and put that on the distro CD. The installer would be non-GPL, closed source and RH could prohibit copying of CDs since at least one app is proprietary. This nixes both CD copying and the FTP download.
How long 'til no more free RH ftp? Remember MacOS? (Score:2)
Why should I not expect Red Hat shareholders to eventually do the same? (most of whom will end up NOT being Open Source folk once grubby investment firms get a hold of most of the shares)
Re:GPL should prevent this (Score:2)
Re:How long 'til no more free RH ftp? Remember Mac (Score:2)
Re:Drop FTP server &| Add 1 proprietary app 2 dist (Score:2)
Re:Drop FTP server &| Add 1 proprietary app 2 dist (Score:2)
Re:How long 'til no more free RH ftp? Remember Mac (Score:2)
Re:Off Topic... sorta (Score:2)
Re:Market Cap explained to geeks. (Score:2)
Re:Um, it's based on the man's NAME, duuuuuuuude! (Score:2)
If you're an American, Linus is pronounced lie-nus, so Linux should be pronounced Lie-nucks.
If you're a Finn, Linus is pronounced lee-noose, so Linux should be pronounced lee-nooks.
NOBODY should pronounce it linn-ucks. That's just ludicrous.
Re:How long 'til no more free RH ftp? Remember Mac (Score:2)
Re:Um, it's based on the man's NAME, duuuuuuuude! (Score:2)
I suppose that's an explanation, it makes sense to me now. Americans tend to do the same thing with words like football (which should be f-ooh-t-ball, not fut-ball).
Or the Greek "gyros" -- do you say "YOU-rohss", "GHEE-rohss", or "JY-rose"? Most of the people who sell them are just happy you're buying.
Well, since I speak Greek, I say "YEE-rohss" (the "y" is really something between a "gh" and a "y" that you Americans can't pronounce), and I really dislike it when people pronounce it "jie-rose". "ghee-rose" (with a hard gh as in "ghetto") is not difficult to pronounce, and at least better than "jie-rose" is.
Re:How long 'til no more free RH ftp? Remember Mac (Score:2)
Yes, as long as the GPL holds up in court, the base Linux kernel and the GNU OS is still freely available, but Red Hat could do their best to make it very difficult to obtain it freely through them.
Re:Interesting... or sad... or typical (Score:1)
Re:What about Linus? (Score:2)
Just a guess, but I'll bet at some point during their existence, Red Hat offered Linus a job. If he had taken it, he'd be worth many millions today. That's a much better deal than being handed a paltry 400 IPO shares. (But he's given his reasons for not wanting to be beholden to one particular Linux-oriented company. So his entry in the startup lottery is with a non-Linux company instead.)
Re:Pretty Smart (Score:1)
Pretty smart to worry about the grovelling of someone who won't even post their name after their comments
leave me alone. I'm kidding.
Looking a gift horse in the mouth (Score:4)
At least Red Hat made the effort of sharing the wealth with OSS developers -- show me another company that would have done the same.
Why this is happening (Score:1)
The 'Nothing Succeeds like Success' article suggests that Red Hat is hilariously rich now because Linux is a good OS. (Of course, we know that Linux is a good OS, but Wall Street suits don't know or care about the difference.) This is not the case. Red Hat is hilariously rich because there is a lot of emotional energy behind their IPO and around 'Internet' stocks in general. This energy can make investors overestimate the likelihood that holding stock in a company will be profitable, which is normally their primary concern).
Eventually, the Internet stock energy will wear off and we'll be left with questionable business plans like Amazon.com's. I hope and do believe that Red Hat's business is based on something a little more substantive than simply selling customer information to third parties and invoking a third party (UPS) to mail out pulp novels and O'Reilly books to geeks.
In the short term, though, Red Hat is rich, and let's hope they invest their wealth in the community. There's no reason to believe otherwise, because they have been giving back to the community since the beginning, paying programmers to write GPL'd code and putting together a solid software distribution.
I hope Red Hat will continue to be a positive model for other free software companies.
Suggested reading (Score:1)
(I could have the title slightly wrong for which I appologize)
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Re:Goin down.. (Score:1)
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Re:Goin down.. (Score:1)
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That's Bullshit (Score:1)
Be very careful (Score:1)
Re:Pretty Smart (Score:2)
If you want/need printed documentation, or want/need telephone support, you're going to pay for it, even if you can download over the net.
Besides, you forget something important. As net speeds go up, so do the number of packages for Linux and therefore the dist size. Also, the more people downloading it, the slower the transfer. So, the average download time might not change by that much.
Re:Here come the suits, look out! (Score:1)
A very laid-back, enjoyable show. Lots of developers and enthusiasts, just like JavaOne and other tech-heavy expos.
/. is becoming a online brokerage's message board (Score:1)
<tim><
Re:WS Success != Technical success. (Score:1)
Actually, JVC put out VHS decks below their costs to gain market share (dumping) and beat-out Sony, that's why we all own VHS decks.
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Re:Um, it's based on the man's NAME, duuuuuuuude! (Score:1)
RHWM Calculations (Score:2)
They equate the fraction of megabytes of the Redhat distribution created by The Community with the fraction of their market cap created by
The Community, which is outright ludicrous.
While Redhat has clearly derived a lot of value
from the contributions of the community (and
correspondingly, they have contributed back),
using the 87% number that the RHWM uses is baseless. This number assigns no value to their
marketing efforts, branding, service work, packaging, sales, etc, which have a much larger
impact on their valuation.
Re:Whoa.. Support??? (Score:1)
Tell me when i can sue Microsoft, and i will give you all the money i get from the case...
Re:Off Topic... sorta (Score:1)
18 million Toys R Us shares at 30, are worth
more than 6 million of RHAT.
2) I put out last week, RHAT would jump 65 - 100,
first couple of days. And then slowly drop off.
RHAT will platueu out sometime Mid-September.
3) Investors usually cash in investments now and reinvest in Fall, watch for everything to start going up again in October.
4) Just check out cnnfn.com and other financial links, the average Joe/Jane can gather so much more information that was once reserved by the few.
:) back to work.
Re:Pretty Smart (Score:1)
LinuxFund@AOL.com (Score:1)
Anyone know how long these guys have been in business and how much, if anything, they made off of RedHat's IPO?
Re:See why OSS really doesnt work for US! (Score:1)
"Oddly, it is not mentioned that it is not necessarily the people who did the development work that gain financially."
No, the ones who gain (or lose)financially are the ones who put their money at risk. If the people who did the development work wanted money for their efforts they should have tailored their actions accordingly right from the start.
Re:CNBC - avoided covering RHAT. (Score:1)
Danger Will Robinson (Score:1)
We have over ten million dollars to invest in the community and do not own
any of the Red Hat IPO or Red Hat in the open market.
Obviously we did not personally design the site nor discover that our ISP was
using an NT server. However, we are taking steps to re-do the web page with a
Linux-based program and to have it run from a Linux server. Our apologies.
Wm. Jay Roseman for
The Linux Fund
What I was questioning was whether a 'net and software savvy company would want the hassle of being considered clueless and newbie by many because of an AOL e-mail address.
What I'm guessing now is that these guys didn't even know that there was a Linux bandwagon to jump on until after RedHat IPO'ed. Probably thought RH had something to do with millenary. Are we really supposed to believe that someone with 10 million to play with couldn't have gotten a piece of the IPO at $50 or less and flipped it somewhere between $80 and $90?
Re:CNBC - avoided covering RHAT. (Score:1)
Just a few minutes ago (7:08 am EDT, 08/18/99) they were showing off a quilt that some anonymous person had sent them. On the quilt were 16 (4x4) squares with various illustrations having to do with various CNBC features. As they pointed to and explained the signifigance of each they seemed to be very carefully avoiding any mention of the 4 corner squares, each of which was a penguin! Curiouser and curiouser.
Wonder what would happen if they suddenly received a torrent of e-mail asking "Why are you guys avoiding talking about Red Hat?" Especially if some other media outlets were alerted to it?
Re:CNBC - penguins explained (Score:1)
Re:How will this money be used? (Score:1)
> an idea how this money will be spent?
Most of this is still all "virtual" money. Bob Young holds stock that would be worth $500M if he would be able to sell them all at the current wall-street price.
Red Hat grossed about $84M through the IPO. That's the money they can spend.
Bob Young and the others who have stock will do with their money when/if they sell their stock is purely a private matter for those involved. Red Hat has no say in that.
-- Roger.
Support (Score:2)
Re:Off Topic... sorta (Score:1)
The articles that have appeared over the past day or so have been pretty neutral and I haven't heard
any of the talking heads on the street complain about the valuation. Long term I consider
Red Hat to be more attractive than a lot of the other tech stocks out there. I just wish I had jumped on
Juniper and RedBack. They're going wild.
I'm not an investment counselor, nor do I play one on television. These are simply my opinions.
YMMV, batteries not included, see store display for complete details.
--Kit
Re:Pretty Smart (Score:2)
Here's the link. [linuxtoday.com]
--Kit
Why people care about Market Cap (Score:1)
Why you ask?
The basic principle of value-based investing (as practiced by Peter Lynch and Warren Buffett) is to look at where you think a company is going, compare that to the market cap, and buy when the current market cap is below what you think that the future one will be. The point being that the value of holding a stock is eventually determined by dividends, which in turn depend on earnings (aka profit), and as a rule of thumb the relationship in a stable company is that market cap tends to come out to 20 times earnings. Therefore if your estimate of future profits says that the future market cap should be above what it is today - voila! A long-term investing opportunity.
So a market cap of 5 billion for RHAD would mean that someday it should be making 250 million profit per year in a few years. Analyze the Linux market. If Linux turns the OS market into a commodity market, then RedHat is going to have fairly low profit margins, so that level of profit requires truly impressive revenue streams which, at a low per unit cost, implies very impressive volumes.
As in several orders of magnitude greater than the current OS market.
Now there are other theories of investment than value-based investing. For example George Soros does even better after a speculator, trying to make predictions based on his judgements of the irrationalities of others. (A quote of his, "An investment is a speculation gone bad.") However people who try to imitate Soros are more likely to wind up broke than people who imitate Buffett.
Cheers,
Ben Tilly
That is true (Score:1)
By contrast you may find lower ratios in something like power companies that are very stable, but have essentially no growth prospects.
Cheers,
Ben
The source to *what*? (Score:1)
Now RedHat has been really good about this. But availability of source for the GPLed parts of RedHat does not mean that anything like a working distribution has to be freely available!
Cheers,
Ben Tilly
My analysis (Score:2)
Basically unless RedHat can get into other lines of business or significantly change the market dynamics upon which their business is based, I don't see them as a long-term investment being worth anything close to what they are currently priced at.
Sincerely,
Ben Tilly
Re:Off Topic... sorta (Score:1)
I expect to see it settle back down between $15-25 depending what the hype is when it gets back down there.
If you've got stock now - SELL!!!
r@m
Re:How long 'til no more free RH ftp? Remember Mac (Score:1)
Re:Who are all the people behind RH (Score:2)
Is this a misconception? (Score:1)
zero culpability should something go wrong) and
use it in mission critical applications, the PHBs won't get the screaming willies.
Ahem - I'm starting to get pissed over this - where is the 'culpability' in licensed proprietary software should something go wrong? Every EULA I read has verbiage to the effect of "disclaim all
Chuck
Re:Not really (Score:1)
Chuck
Re:Who are all the people behind RH (Score:1)
Re:GPL should prevent this (Score:1)
Re:Drop FTP server &| Add 1 proprietary app 2 dist (Score:1)
Praise Red Hat, Punish E*trade (Score:1)
However, I think it is very appropriate for people to whine about the IPO process. It wasn't just "botched," it was IMHO manipulated to exclude as many "geek" investors as possible in favor of e*trade's priveleged clientel. Those who were burned can and should whine, loudly, to the SEC. Everyone knows Red Hat isn't at fault here, rather e*trade is. However, those who were burned should not go letting e*trade off the hook for this debacle, simply because we like Red Hat.
DISCLAIMER: I made no effort to take part in the IPO and have not suffered any loss as a result of e*trade's behavior. My opinions are my own, based on conversations I've had with others who were burned, as well as messages and articles I have read here and elsewhere.
Re:Lesson learned... (Score:1)
In the future do not invest through on-line brokerage accounts. You will not have the service when you need it (it is even legal for them to freeze your account for up to 60 days).
Transfer your accounts at E-Trade to a full-service brokerage firm.
There's nothing wrong with discount electronic brokers, as long as they're honest, and on the ball. I don't have to transfer anything, as I've kept my current trading account, and only sent E*TRADE some spare change I was keeping under the mattress.
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Re:When? (Score:1)
That's cute.
As for me, I'm going all the way with this. E*TRADE doesn't have the luxury of throwing me a handful of shares to shut me up. So, I'm going to wait and see if NASD wants to give them an anal exam; then go shopping for a lawyer. I now finally received my money back from E*TRADE. I think I'm going to use that money to pay for a nice Armani suit.
--
The ball is still rolling. (Score:2)
The IPO itself may be over, but the ball is still rolling full steam ahead. I anticipate that this week's is going to be when NASD and SEC get flooded with all the complaints, and E*TRADE's Legal and Compliance gets a bunch of certified mail. At least one very well respected Wall Street daily is going to do a major story on E*TRADE's fiasco, according to their reporter who extensively interviewed me last week.
The fireworks haven't even started. E*TRADE may have screwed me out of some major cash, but I'll get it back in form of priceless entertainment, watching them SQUIRM.
--
No break for E*TRADE (Score:2)
First of all, if E*TRADE's problem really was that there wasn't enough shares to go around, you wouldn't see so many people bitching about it. A few would be barking at Red Hat, for not allocating enough shares, but that's pretty much it.
If E*TRADE simply told me: Sorry, can't give you X shares, we only can give you X/2, or even X/4, because of demand, I wouldn't have any problem with this whatsoever.
But that's not what happened, was it? At first, while I believed that E*TRADE did have valid and reasonable reasons why they blew me off, I wasn't really upset that much. It was only after I started reading what everyone else was saying, and after I obtained more information, did I start to get pissed off, when it became more and more obvious to me that this whole affinity program, as managed by E*TRADE, was a complete and utter sham.
First, they started declaring pretty much everyone to be ineligible for the program. Then, when called to task for it, E*TRADE backpedaled, and with a "wink wink nudge nudge" attitude started telling people to claim that their net worth exceeds Donald Trump's.
Then, after some people were actually accepted into the affinity program, E*TRADE suddenly decided to throw them, and everyone else, out of it, unless they receive a telepathic message that they must "reconfirm" their application within a fifteen second time slot, and in the middle of the night for people in some time zones. And after they figured out that the instructions E*TRADE E-mailed for reconfirmation were actually wrong.
Only after someone (probably Young) ripped them a couple of new assholes, did they backpedal again, and sheepishly agreed to extend the alleged "reconfirmation" period for one more today, FINALLY giving people enough time to jump through the hoops that E*TRADE erected for them.
And then, after all that, E*TRADE still claimed that there weren't enough shares to go around?
Puhleeeze...
Look, how many people, REALLY, are bitching about this on Slashdot? I'd say less than a hundred. Even if that's only 5% of everyone who was left in the affinity program, after E*TRADE finished throwing as many people out as they could, and there were about two thousand people left, you're telling me that the average number of shares in an application was 400?
There was certainly individuals who applied for a thousand or more shares, but, there weren't many of them. Most people, as you said, sent in just enough money for 100 or 200 shares.
This doesn't add up. Red Hat should demand a full accounting from E*TRADE as to where every one of those 800,000 shares went. E*TRADE better be able to document that there were at least 800,000 shares distributed through the affinity program. If they can't, and if they did not give everyone the amount of shares they requested, that's food for NASD and SEC's lawyers.
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Re:Pretty Smart (Score:1)
Perhaps Name Brand Awareness??
Seriously, we don't know what Red Hat will focus on in the future, whether they'll focus highly on support, or service, or something else. But that's the Linux business model. You can have a brand name without a "product" to sell.
To put it in other way, there is a local computer consulting company that doesn't have a product of their own to sell, but is still in business. The only difference between reselling Windows, and reselling Linux, as I see it, is that Microsoft doesn't allow you to rebrand their products.
-BrentRe:Um, it's based on the man's NAME, duuuuuuuude! (Score:2)
For myself, I choose to pronounce it "linn-ucks" rather than "line-ucks" just because it sounds nicer, but also because it's closer in sound to both "unix" and "minix".
There isn't a "should" here, since there aren't any real rules for when a word jumps languages, especially an invented word. I'm more of a usage-descriptive dictionary type, myself, anyway. Most words that come to us start out being pronounced like the original word, then gradually come to be pronounced according to local rules. Example: French "forte", which is one syllable. But it came to be pronounced "for-tay", which is wrong, but makes more sense to English-speakers, because the "e" at the end is superfluous. Or the Greek "gyros" -- do you say "YOU-rohss", "GHEE-rohss", or "JY-rose"? Most of the people who sell them are just happy you're buying.
(On the other hand, I speak French well enough that I absolutely refuse to say "lingerie" lahn-zha-RAY. It's LANN-zhay-ree, dammit!)
I think the LEE-nucks and LINN-ucks pronunciations will eventually be supplanted by LINE-ucks, just because American English works that way
Re:How long 'til no more free RH ftp? Remember Mac (Score:1)
That means,
1) On the CD distro
2) FTP
3) Through the mail
RedHat's not stupid. Shareholders or no.
For Immediate Release: (Score:1)
For Immediate Release: RED HAT FINALIZES DEAL WITH ANDOVER.NET, EXCHANGES RED HAT SHARES FOR SLASHDOT MODERATION POINTS
Damn, skimming through the posts on this topic, it looks like anyone who raises the possibility that Red Hat is overvalued at $60-$70/share gets their score whacked. I think I need to go back and read the Slashdot posting FAQ: I thought as long as we gave Linux the rah-rah treatment and trashed Microsoft, our posts were guaranteed an extra point or two -- now it looks like we have further requirements of kissing Red Hat ass and suspending any Wall Street knowledge.
I know, I know, I shoulda RTFM.
Cheers,
ZicoKnows@hotmail.com
That's why he's right (Score:1)
Here in America, you don't the name pronounce Linus like "Lynn-us," you pronounce it like "Line-us." For God's sakes, man, didn't you ever watch Peanuts as a kid?
Not to mention that Linus doesn't pronounce his name like "Lynn-us" anyway, but more like "Leenus." Basically, if there's one pronunciation that doesn't fit, it's the "Lynn-ux" one -- if you want to make it sound like the guy's name in his native tongue, say "Leenux," just like Linus himself pronounces it. Alternatively, use the Anglicized version and say "Line-ux." "Lynn-us" should die already.
Not meant to flame you, since you seemed good-natured enough about it, although I'll take pleasure in tearing the head off of anyone who tries to berate me into pronouncing it the way they do, especially when (1) their choice doesn't really make sense, and (2) Linus himself is agnostic on how other people should pronounce it.
Cheers,
ZicoKnows@hotmail.com
What about Linus? (Score:1)
I can't find anything on the Yahoo Insider.
Re:How will this money be used? (Score:1)
It won't. Keep in mind that Red Hat STOCK is worth a total of $5.6B. Red Hat actually RECEIVED $14.00 a share from the initial investors and only made $840M from the deal ($14.00 per share, times 60,000,000 shares according to their S-1/A filing)
$840,000,000 ... while it may seem like a lot of money to have in the bank (and for a new company it can be), is NOT a lot of money at all. I've heard stories that companies like Microsoft have $1B war-chests that they rarely dip into.... and RHAT IPO'ed not to have a warchest but so that they could grow the company.
What it DOES mean, though, if RHAT stock stays even approximately close to where its at, is that RHAT screwed themselves by pricing their IPO too low.
Re:How will this money be used? (Score:1)
They only SOLD 6,000,000 shares, so they only made $84M on the deal. There's another 60M shares that are privately held (outstanding but not part of their float) which inflate the market cap greatly (probably still large majority held by Bob Young, Intel, etc. would be my guess).
Either way, they still didn't make NEARLY all that much off the deal.
Re:What about Linus? (Score:1)
2.) Linus would not be eligible to participate in the IPO as he is not a US Citizen (he is a foreign national legally employed and residing in the US).
3.) I strongly suspect that, based on #1, Linus did pretty OK on the RHAT IPO and probably doesn't have to work another day in his life.
Re:Stock Games (Score:1)
The rather obvious answer is that these investments are investments in the future...they are also investments in the competency of the company. The old days of scrutinizing PE, PS and PEG statements are a thing of the past with these new companies.
RedHat has two key advantages, in my opinion. The first is that they have a product and the accompanying services to sell. The second is that they are the first of a new wave of an Internet/software hybrid company to hit the market. That differentiates them from the recent plethora of IPOs that have flooded the market.
Sure they're overcapitalized. But that seems to be the rule of the day for these things.
And if everyone sold IBM, that stock would drop, too.
Check out the market caps of some of the Internet darlings...you'll find incredible valuations for companies who have never turned a profit! Conventional wisdom, in these cases, appears to be unconventional.
Re:Off Topic... sorta (Score:1)
Looks like it may have stabilized at $65 today,
but will it come down another $10 tomorrow?
What about the next day?
I'm also really surprised that RHAT is the only stock people are talking about.
Some of you must have taken some profits from RHAT.
Are you holding on to the cash to buy some back at $35 (or whatever),
or is there some other Linux related company worth investing in at the moment?
What about SGI? I've seen stories about them dumping NT, focusing on Linux, and building a Beowulf cluster in Ohio.
Anybody have any thoughts on whether their stock might be a profitable long-term buy?
Re:Goin down.. (Score:2)
Don't you know you can't short a stock for 30 days after its IPO?
Re:How long 'til no more free RH ftp? Remember Mac (Score:1)
hackers would fork off a GPLed installation routine.
It depends on your needs (Score:1)
I don't think so. At this point, all I care about is using a PC (and a server) that doesn't crash every five minutes. I could really care less if Linux was free or not -- as in either speech or beer. I just want an OS that works (this is one of the reasons why I like Solaris). If it attracts developers -- and therefore software, drivers, etc. -- then all the better. If it takes making money in order to do this, then so be it.
The fact that the OS which is coming up in the world happens to be GPLed is icing on the cake as far as I'm concerned. I'm a card-carrying Libertarian; I love a free OS in all senses of the word. But I'd also pay money for a better mousetrap. Linux works very well, and it does what I need it to do. It happens to be free, but if the GPL expired tomorrow and Linux became proprietary, I'd still use it. Because it works, and that's where the traction is.
-B
As long as it helps Linux, I don't care (Score:5)
I know that some people see OSS, Linux, GNU, whatever as a sort of religion. And these people get squirrely when things start moving into the mainstream and getting "corporate-ized". But this is what it will take to get Linux and OSS into position to replace (or at least augment) NT and the like. In a way, it legitimizes Linux in a lot of people's eyes. Like it or not, that's the way it is.
IT managers need to see things like an IPO and articles in the Wall Street Journal about Red Hat -- it gets Linux and OSS on their radar. And they start wondering what this whole Linux thing is about. And they read InfoWorld or Wired and start getting a clue. They start feeling a little better about Linux because they've "heard about it". So when a tech decides to download(!) a freely available OS which comes with zero support (and zero culpability should something go wrong) and use it in mission critical applications, the PHBs won't get the screaming willies. To them, Linux can be taken seriously now because of things like the Red Hat IPO. Red Hat and Linux have now become "real" to the PHBs.
Anyway, I could go on about how Linux was the red-headed stepchild of the corporate OS world, but you get the point. The bottom line is that the IPO goes a long way toward guaranteeing that Linux will become a success. And that means Linux will not just live, but grow. And that means we all get a better Linux.
If the IPO gets just a handful of developers off the MFC tit, then we all come out ahead in the long run -- no matter what philosophical issues we might have about Red Hat making money off OSS. Let them make all the money they can, I say.
-B
Re:Off Topic... sorta (Score:1)
I think the daytraders have gotten hold of this thing. Intraday range 63-75 today with high volume.
I wouldn't expect RHAT to settle down in the forseeable future. It's officially an "Internet Stock."
I would rather own a company with a future (Score:1)
You seem to be suggesting that redhat will go down and SGI will go up. I would suggest that the two are only somewhat related. Though, given the way SGI has thrown itself behind linux, its future sucess may be tied more closely to the success of redhat than either of us are giving credit for.
Re:Support (Score:1)
Don't they realise that most people technical enough to want to install their own operating system (especially linux) would know enough about getting support from free sources (no pun intended).
Re:Stock Games (Score:1)
Ahh well..
---
Re:Remove emotion from stock prices (Score:1)
Re:Remove emotion from stock prices (Score:1)
MUST...
PREVIEW...
NEXT TIME
How dare you!!! (Score:1)
echo "What?! How DARE you disrespect Linux and RedHat like that! Redhat 6.0 is SOO much better then Micro$haft9x and MSOffi$e! BLOATWARE BLOATWARE BLOATWARE! I ONLY use Koffice because its GPLd and gpl is good. anything that comes on 3 cds is just bloatware bloatware bloatware.. die M$ die!";
}
function voice_of_reason () {
echo "Ok, that was fun. Fact is, it is kind of refreshing to hear the voice of reason in an otherwise Zealot run arena (Linux). Nice comment. If I could moderate you, I would bump you up a notch... But I can't. Oh well.";
}
if ($user == "zealot") {
fun_with_zealots();
} else {
voice_of_reason();
}
Why I wrote this comment as a PHP program, I will never know...
Re:Price of RH software (Score:1)
Linux=good does not mean Red Hat=good (Score:3)
1. like linux
2. wish RHAT all the best
3. am happy to see the linux community enjoying success
Now on to some critical commentary.
It's a safe assumption that Linux is good. It brings a lot of value to those who use it, and is definitely benefiting from a lot of investments and attention these days. I still have yet to see, however, how a dedicated linux company (eg. Red Hat) can become the "next Microsoft/Dell/Cisco."
Let's define "next Microsoft/Dell/Cisco." I'm talking about a very succesful public company, with rapid sales growth, a extremely bright current and future prospects.
For a company to be a successful, it must grow its sales, and figure out a way to make decent profits. How does a company grow sales? Sell something. What does Red Hat plan to sell? $99-200 Linux distros, and Linux services. It's difficult for me to see massive year-to-year revenue growth selling something that I can dowload for free, or buy from another vendor for $5.00. That leaves services/consulting.
I work for a consulting firm, so believe me when I say that selling services is hard. There are reasons why public companies that sell consulting services aren't valued as richly as companies that sell software or hardware, for example:
1. Selling consulting services often depends on personal relationships with your client(s).
2. The growth and viability of your consulting practice is directly tied to your employees. If someone from Dell or Microsoft quits, the company is affected in an indirect way. If one of my coworkers quits, that creates an immediate revenue hole of $200,000 (2000 hours*$100/hour). I've seen small consulting/services companies literally die over the course of a few months, as their revenue streams literally disappear in the form of massive employee turnover.
Despite the difficulties of running a consulting/services business, many companies do try, and succeed at it. The whole "ecommerce" thing is creating massive opportunities for the industry, that is only going to get bigger as this whole Y2K thing passes away. It's a good time for a small company to be in the consulting gig; there's not a whole lot of recognized expertise in ecommerce consulting, and a small practice can slip under the radar of the big guys, and grow fairly quickly.
Red Hat, however, is not going to slip under anybody's radar; they have too public of a profile. This assists them with recruiting, but will hurt them if they start making inroads against larger competitors. IBM, for example, is kicking all kinds of booty with its Global Services outfit. I personally don't like competing against them. I have little doubt that the companies that are supporting Red Hat in various ways today will not hesitate to start pulling plugs should Red Hat successes start affecting their meal tickets.
The popularization of Linux can hurt Microsoft, but hurting Microsoft does not automatically create an investment opportunity.
A revolution in corporate finance??? (Score:2)
Err.. excuse me? Either I am going blind, or you are seeing something that I am not seeing. What revolution in corporate finance? This was a standard plain-vanilla IPO. By Wall Street standards nothing interesting happened. Other stocks, notably so-called "dot-com" stocks had huge run-ups in their stock prices on the IPO day and after that. Netscape already brandished a sky-high market cap while giving away its principal product for free.
So a sexy software company goes public, the float is very small, nobody can short because there is nobody to borrow share certificates from, and the stock price goes through the roof. So what else is new? Again, what revolution we are talking about??
Kaa
Market Cap explained to geeks. (Score:1)
number_of_shares_sold = 6M;
total_number_of_Redhat_shares = 60 M;
price_per_share = 70.75;
Market_Cap = (total_number_of_shares * price/share );
//Market Cap ~= 5,000M
//Cash earned at 14.00 / share sold is 80M
//Market Cap is really a useless figure.
// Any Questions?
Re:The ball is still rolling. (Score:1)
I have all my investment money with E*Trade and think they do a great job.
Re:How will this money be used? (Score:1)
Re:Pretty Smart (Score:1)
O.k. I'll bite. Why buy the RedHat CD's when you can download it??
First off, I'll admit that the copy of RedHat on my personal system WAS downloaded of the net. I usually try to stay up to date with the latest Rawhide RPMS, so the CD is useless to me. And I don't use tech support, I use DejaNews.
However, I work for a small consulting company, and we've been setting up RedHat Linux file servers like crazy. With each one we deliver a $70 boxed Official RedHat cd set. Why? First off, $70 is peanuts on top of the price of any decent file server. (Much cheaper that Netware 5 or NT4.0!!) Second, our customers feel more comfortable having a nice, professional looking bootable CD they can re-install from. The tech support from RedHat is nice. And the books in the box give them a bit of a basic intro to what's on the server.
Basically, at $70 is to cheap NOT to buy!! $70 is a lot for me to spend on my home system.... It's piddly squat nothing to spend on any decent server!
gimme a break already (Score:1)
But I LOL when I read people (including some not in the affinity group) bitching here about putting in for tens of thousands of dollars worth of RHAT and not getting any. I would have thought people smart enough to be coders and consumers in the open source community would have at least some clue about the laws of supply and demand. It's simple frickin' math.
Let me use an extreme example, but one drawn from reality [slashdot.org]. Suppose every affinity-group member sent in $90,000 and ordered 6,400 shares at $14. Red Hat set aside 800,000 shares for "friends and family," and even though that includes company directors, officers and employees -- a point often forgotten in the outcry -- I'll still assume 800,000 shares for "the community." So 800,000 / 6,400 = 125. If more than 125 coders got The Letter, there wouldn't be enough shares to give every one of them all of what they wanted. I haven't seen a reliable figure for how many got The Letter but it sure seems more than 125 have posted here.
Probably few E*Traders put in for that much, but clearly the demand exceeded supply (again, it would be useful if E*Trade would disclose how many got The Letter, the total number of affinity-group shares requested and allocated to Letter-bearers, and a similar accounting for those of us who did not get The Letter). When that happens, if you get anything at all at the offering price, you're lucky. If you get shut out strictly because of supply and demand, that's the breaks. Get over it.
I also laugh when I see someone complain that they put just enough money into their shiny new E*Trade accounts to cover 100 shares at $12 each, the top of the original price range (and I'm not talking here about anyone who really couldn't afford more than $1,200). These folks obviously have not even the faintest idea how IPO pricing works, and I highly doubt they'd have read in the S-1/A and E*Trade's disclaimers that IPOs are highly speculative -- i.e. that you can LOSE a lot of money playing them. Obviously many of us felt RHAT would do well, that open source can work in the real world, but there were no guarantees.
I suspect the discussion here would have been a whole lot different if RHAT had tanked coming out of the gate or shortly thereafter (as so many other IPOs did in the preceding couple weeks). Of course that would have happened only if there was insufficient demand for the stock. Then everyone who bought their (formerly) $90,000 worth would be crying that E*Trade and the SEC made it too easy for them to take a bath.
Re:Price of RH software (Score:2)
The $70 is the price that you pay for a printed manual, official support, and physical distribution of the media. If you want the software for less, then don't buy this version.
Redhat made a smart move by raising their prices. I used to buy official redhat CD's because I liked the distribution and wanted to help support the company. But by raising the prices, they are indicating that they don't want or need this type of help anymore. So just buy it from cheapbytes or download it for free. Support redhat by continuing the development of linux and other free/open source software. Or support them more directly by buying stock.
99 little bugs in the code, 99 bugs in the code,
fix one bug, compile it again...
Re:How long 'til no more free RH ftp? Remember Mac (Score:2)
All the investors invested in Redhat full knowing that they give away their distribution and hope to make money off services and support. That's their bussiness. Whether or not this bussiness has a future or not, is a different matter.
I mean, I can't buy stocks in a company that sells Apples and then sue them because the Orange bussiness is more profitable, can I?
Slightly relevant, yet a wee bit off topic. (Score:2)
Consider you are Joe C. Coder in 1997. You are gladly hacking away on xyz program. The community is solid (at least it seemed so from my point of view) and most people look at you with raised eyebrows if you mention Linux outside of a CSc lab.
Now fast forward a couple of years.
IBM, Oracle, Corel, etc, etc, etc are all pitching their hats (so to speak) into the bin. Great, they are adding to the code/community and it continues to improve. And ever so slowly the media start to latch onto this "Linux" thing.
Actually, the media caught on and THEN the corps came a-circling. small point there.
Now look at our happy little OS / community.
Ego, the type derived from 'net respect and not peer respect,is starting to appear; money is starting to drive. Remember the flames (yeah, like they are a thing of the past) in any discussion of GNOME vs. KDE?
The OS lives on, better than ever, HOWEVER the community aspect is starting to slip in the morales department. I have occasion to hang out on IRC and you see lots of "the newly christened" Linux newbiew happily singing the praises of the OS but if you so much as mention the "evil empire" of MS you will be on the hot end of some rather poorly constructed flame. These new folks just take as the gospel the mainstream media articles that support linux.
They dont bother to do any research to the reasons behind the comparisons. They just want to appear knowledgeable for the "street cred".
In essence these new "Linapostles" do more damage than good. It is great that they use Linux, it is foul that they just pick up the old school line of World Domination without actually knowing why. To defend Linux with kneejerk precision and flame any pundit that would dare condescend on their "holy" OS. The MS Windows evangelists are moving...to Linux. They have found a new podium to bang upon and the unclean (and loud!) masses are coming!! .
The reason I started using Linux was the great atmosphere; there were lots of intelligent discussions to read, never once did I have to trudge through ascii haxor text. I think the atmosphere is starting to cloud and this community that we all cherish, and I have enjoyed being part of, is slowly mutating...
to a gang.
I hope that I am wrong.
my
Za's Vid
E/.
ps. for what it is worth MS got a total monopoly because Word 6 was (and still is when I have the need to be a wordsmith) simply the best of the wordprocessors. If Word worked (natively) in Linux I would buy it.
********************************************
You may fire when ready.
Interesting... or sad... or typical (Score:3)
LOL
Re:As long as it helps Linux, I don't care (Score:2)
Even better is that techies can now say: "Oh, I'm just trying out that new Red Hat Linux software that just had the IPO the other day", a day or two later: "Hey PHB! Look at all the nifty stuff that this thing can do- do you think we should buy the product so we can get support, or do we want to just run it for free as is? No really- they don't mind if people use it for free, they just charge for support, etc..."
Or maybe one of those coffee commercials: "[we've secretly replaced his NT server with Linux, let's see if he notices]" ... pan across techie slowly sipping from a cup... ;^)=
Now that there is more visibility to Linux/RH, it becomes a lot less verboten to talk about/play with. It's been my experience that people don't like change, but when confronted with it, they've got to be prepared to jump right in or get left behind.
Robert (rames@utdallas.edu)
Buncha Socialists (Score:2)
Whatever. The Bill Gates Wealth Clock claims that he took over 350k$ from my pocket. The Red Hat Wealth Clock implies the same. Like a dollar in my pocket means a dollar out of someone elses.
/rant
WS Success != Technical success. (Score:2)
What a load of balony. The success of the RedHat IPO says not a single thing about the value of Linux as a good OS. People buy stock cause other people are buying stock cause other big companies are pushing it as the New Thing (tm). It looks like Linux is poised to become the next big thing in the IT world, but since we've seen it happen with Windows 95, we can't draw a line between the stock value and the power of the OS; only the stock value and the percieved market placement and possible success of the OS. Beta was better than VHS
I'm not bashing Linux, obviously; I use it myself. I'm trying to discredit the notion that success on Wall Street confirms the technical superiority of Linux
This is approaching dangerous levels of bandwagoning.
How will this money be used? (Score:2)
IPO and Hope Beyond Riches (Score:2)
In short, people have been making money off Linux for at least 7 years (by my own experience). The fact that RedHat has hit the jackpot shouldn't make a bit of difference to the developers (I know, wishful thinking). I am anxious, however, that the folks who have contributed the most to RedHat's windfall might be discouraged by the sudden rush of the public to own a piece of Linux. I fear that the "gold fever" that has ensued may spoil their enthusiasm and, eventually, their desire to contribute.
If there is any way I can convince those folks not to lose focus, let me at least try by making a few points.
1) Linux has given me the opportunity to use UN*X on a computer I could afford (i.e., an x86 PC). The unforseen benefit of my migration to Linux has been that I have been a participant in the explosive growth of an exceptional OS.
2) The fact that I can install Linux on as many machines as I can afford has given me the tools to build my own network.
3) I can scan across the globe and interact with people who have installed a world-class OS on scrap PCs. These folks have been able to enter the information age without having to mortgage their home in the process.
4) Distributions are available to fit user ability and NATIVE LANGUAGE without having to wait for Redmond.
For these reasons, and many more (so many they would hog bandwidth from their enumeration), Linux is a phenomenon that must succeed. Words alone cannot express the gratitude I feel for everyone who has ever posted a patch, beta tested a module, or has in any way been associated with Linux's success.
I can only hope that the individuals who have contributed to this success can see past the dollar signs. I am not a proficient programmer, so the only contribution I can make is to buy Linux-oriented products. I have done so in the past and will continue to do so in the future.
I don't want to go back to the dark days.