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TurboLinux follows Intel's investment with VC cash

$6 million injection to fund management, programming team expansion

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Linux distributor TurboLinux yesterday scored a $5.5 million investment from US venture capitalist August Capital, along with around $500,000 from investment bank Broadview. The deals follow Intel's investment in the company, made last week. TurboLinux (formerly known as Pacific HiTech) said it will use the cash injection to fund expansion: it intends to grow its senior management team and to hire more programming staff. Unlike Linux distribution rivals Red Hat and Caldera (rivals in the sense that they're all pursuing profit through markets associated with the open source OS, rather than the OS itself), TurboLinux is focusing on the high end of the market where it can add value to the basic OS through proprietary, commercial products rather than the provision of support services. For example, TurboLinux's upcoming site management software will costs users $995 for a two-machine licence, or $1995 for an unlimited licence. So far, that plan appears to be working -- TurboLinux claims to be in profit, something that neither Red Hat nor Caldera can boast. And analysts and investors agree that, if TurboLinux retains its focus, its revenues and earnings will continue to grow. As a privately-held company, TurboLinux's books are closed to scrutiny, but the company VP Lonn Johnston told US newswires the company's revenue is close to that of Red Hat -- ie. around the $7.2 million mark. Of course, how long TurboLinux remains privately-owned is another matter. With IPOs now well established as any IT company's route to second-stage financing, it will be hard for TurboLinux's management to resist the temptation, especially since its profit-making status could push the company's stock rather higher than that of loss-making (though better known, in the US at least) rivals like Red Hat. ®

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