hi i usually dont care for the ficklist wall streeters but i feel instead of offering linux for free ( the downloadable) or for around $70, there must be one price, say that barely covers the cost of the cd plus soemthing extra, say around $5. may be those ppl will be satisfied ;-) ( hmm... but what about suse ;-( ) cheers cheedu On Sun, 20 Aug 2000, Purple Shirt wrote:

Here is an article in the NYTimes.com which discusses what I had said a few weeks ago. Last years stock ride was due to intense dot com mania, the big analysts on Wall Street have no trust into the Linux stocks and that is why the stocks are croaching along the bottom threatening companies like Corel.

Hence this situation will never change unless Linux advocates and users themselves become avid owners of the companies they use software from or whose ideology they represent.

SuSE will be in for a rough ride when they IPO. If they don't continually produce profits it could quickly go the way of Corel.

I see only the solution that through continued investments by Linux users into their Linux companies we can sustain the price of Linux stocks and maybe even give it a long term upward trend and therefore attract Wall Street's big money spenders.

mk

article:

Why Few Funds Are Lining Up to Buy Linux

By DANNY HAKIM

emember Linus Torvalds? Last year, the Linux operating system he created was going to revolutionize the software industry, do more damage to Microsoft than the Justice Department and make investors rich. This year, Linux stocks have been in a prolonged downward spiral, and Mr. Torvalds has been replaced as a media favorite by Napster's founder, Shawn Fanning, the latest technologist viewed as most likely to wreak havoc on traditional businesses.

Individual investors might see the depressed stock prices of the companies that sell services and products supporting the free Linux operating system as a buying opportunity. Last week, the stocks even showed signs of recovery after a Linux conference in San Jose, Calif.

But a key problem remains: Wall Street is not buying the Linux pitch. Professional money managers have done little beyond pocketing quick gains after the gold rush last year of initial public offerings.

That presents two caution flags for the average investor: What is holding Wall Street back, and how far can Linux companies go without institutional support?

Consider VA Linux Systems. Last December, this Silicon Valley company, which makes and supports Linux-equipped servers, gained almost 700 percent on its first day of trading, the biggest gain ever for a public offering.

But only 24 out of several thousand mutual funds now hold the stock, according to Morningstar Inc., while 35 hold Red Hat, the North Carolina company that sells Linux-related applications.

For two companies that are considered leading lights among the Linux stocks -- which also include Caldera Systems, Corel and Cobalt Networks -- this is scant endorsement.

By comparison, some of last year's other hot initial public offerings have received a far warmer reception. Ariba, the Internet software company, has 158 fund holders. Phone.com, which makes software for cellular phones, has 132, while Brocade Communications, which makes the switches used in computer networks, has 213.

Why the lack of interest in Linux?

"We're kind of indifferent at this point," said Andrew S. Cupps, manager of the $857 million Strong Enterprise fund. "We've looked at Red Hat and VA Linux, but we've decided to watch for a while."

From the standpoint of technology, Mr. Cupps is intrigued by Linux. But he and other professional investors question how much money companies can make selling services and products around a free operating system. Even though VA Linux's stock has fallen 80.8 percent this year, and Red Hat's by 77.8 percent, Mr. Cupps is concerned that valuations are still high.

So are his colleagues at Strong Capital in Chicago. Last year, Ronald Ognar and Derek Felske bought 3,500 shares of VA Linux for their Strong Mid-Cap Growth fund. They have since sold their shares.

"By definition, nobody owns the code, so nobody can sell it," Mr. Cupps said. "They have to be creative and find other ways to drive revenue. The way each company does that is through services. The irony is they're being valued like software companies, but their revenue models are going to be more like technology consultants."

John Hurley, a money manager at Bowman Capital, a $5.5 billion Silicon Valley investment firm, said, "I'm not sure how this becomes a big, profitable business."

To date, Linux has made its strongest impact in the market for servers, the powerful computers that drive technology networks. But Mr. Hurley said he believes that the chiefs of technology departments at many large companies are hesitant to take a chance on Linux.

"You don't get paid to be a hero," Mr. Hurley said. "You get paid to make sure that things don't break, and when they do break, you can fix them instantly."

Bowman had a position in Red Hat at the end of June, according to a Securities and Exchange Commission filing. But it now has no positions in public Linux companies.

Eric Gerster, a technology analyst for T. Rowe Price, agreed with Mr. Hurley.

"A lot of Linux momentum was dot-com-driven last year -- companies putting in Linux to start their Web operations because it was inexpensive," Mr. Gerster said. "But as they became real businesses and wanted more support, they either bought Sun servers or a Windows NT server."

Technology investors do agree that Linux, with its open source code, has tapped into a deep well of desire among young software developers, but convincing Wall Street will be more difficult.

VA Linux, in its quarter ended April 28, had $34.6 million in revenue, up 71 percent from the previous quarter and 710 percent from the comparable period a year earlier, but still lost 23 cents a share. The brisk revenue growth has not been enough to convince more than a couple dozen fund managers that the company is worth a $1.7 billion market capitalization.

"They're trying to figure out our business and our business models," said Larry Augustin, founder and chief executive of VA Linux. "It's mostly a matter of time, where people show consistent results."

VA is priced at about 22 times its last 12 months of revenue, cheap compared with Red Hat's price-to-sales ratio of 78.3, but well in front of Dell, which is priced at about three times its revenue.

"Is Linux for real? Yes," said Mr. Gerster of T. Rowe Price. "Will it generate enough revenue to justify the market caps? I don't think so, and that's why people aren't investing."

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