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Linuxcare significantly downgrades IPO expectations

$92m target drops to $56.6m in latest SEC filing

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Linux services company Linuxcare has massively downgraded its IPO expectations - or so its latest filing with the US Securities and Exchange Commission would seem to suggest. The company's previous filing, which simply registered its intention to go public, set its IPO-derived fund-raising target at $92 million. But a follow-up filing made last week noted that Linuxcare expects to raise just $56.6 million. Preliminary filings contain an estimate of the funds to be raised through an IPO to allow the SEC to determine the level of the fees the would-be IPO-er must cough up to go public. However, such estimates are usually lower than later target, not higher. And the first filing doesn't have to indicate how many shares the company will offer. This time, Linuxcare said it will offer 4.5 million shares, but it's not known whether that marks a reduction in the amount of stock to put up for sale - hence the lower proceeds - or whether the company expects to make less money per share. When they go on sale, Linuxcare's shares will be priced between $13 and $15 apiece. Linuxcare's previous filing noted revenues of $518,111 and losses of $10.6 million for the time between its formation in January 1999 to 30 September 1999. By the end of the year, revenues had risen to $1.5 million, and the loss to $21.3 million, according to the latest filing. Linuxcare plans to spend its $56.6 million on a mix of sales and marketing efforts, and equipment. It also plans to spend around $65 million on acquisitions, so that plus its already escalating losses means the company isn't going to make any money until 2002 at the earliest. Fingers crossed, that is. Linuxcare's business is founded on major service providers outsourcing their Linux support. If the demand for Linux support continues to grow - as it shows every sign of doing - that's good news for Linuxcare. Unless, of course, said service providers decide they're better off fielding their own, in-house expertise. Over half of Linuxcare's revenue last year came from just three companies: Sun (26 per cent), Motorola (18 per cent) and SGI (11 per cent). If just one of them drops the company, Linuxcare is going to have problems. ® Related Stories Linuxcare challenges MS to open Windows source Linuxcare opens support services for customer rebranding Linuxcare expands globally through $32.5m investment

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