IPO makes VA Linux instant $10bn company
But one can't help starting to wonder why...
Yesterday's VA IPO turned into the biggest Linux hit yet, with the company's stock at one point zooming 800 per cent over the debut price of $30 a share. And that $30 had been a revision of a revision - VA Linux Systems' offer price had already been yanked up a couple of times in anticipation of greater demand than, er, anticipated. The stock fell back slightly (relatively speaking, anyway) later, but still left lucky company operatives dripping with virtual lucre. VA closed with a market cap nudging $10 billion, CEO Larry Augustin's stake and options make him worth $1.7 billion, and company director, general-purpose guru and "corporate conscience" Eric Raymond tells us in Linux Today this morning that he's now worth around $36 million. Eric* says it won't change his life, and anyway, he's the least rich of the director shareholders. VC backers Sequoia are the most rich, and Intel is sitting fairly pretty on a reasonable-sized VA share pile too. But when Linux IPOs are getting to this kind of level we're clearly approaching the point where worries about the bubble bursting are going to start to emerge, in the same way as they did with Internet stocks. Sure, Internet IPOs still tend to do well, but there's a general consensus that a some point there's going to be a reckoning, and the bigger Linux IPOs get, the sooner scepticism will start to set in. A quick reality check of VA, for example, gives us net revenues to 29th October of just under $15 million, and an operating loss of over $10 million. Eric Raymond alone is "worth" more than the company's total net assets, according to the balance sheet. So how exactly (or indeed, even approximately) will a company of this size justify a valuation in the region of $10 billion? How indeed... * Eric, bless him, says he might get a new mobile phone, a flute, cable Internet access and "maybe a nice hotrodded match-grade .45 semi for tactical shooting." Ah, the youth of today... Once upon a time the nouveau riche destroyed themselves in orgies of drugs, smashed hotel rooms and Rolls Royces in swimming pools. ®
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