BOSTON (06/01/2000) - Another high-profile Linux company is facing tough measures to adjust a business model based on selling a product that is free.
San Francisco-based TurboLinux Inc. cut programs and laid off staff on Wednesday.
"We took a step towards bringing our expenses in line with our revenue and profit growth," said Lonn Johnston, the company's vice president of corporate communications.
He said the company took measures on Wednesday that included cuts to operations and staff. Online rumor mill Slashdot.org ran an anonymous report yesterday saying TurboLinux had slashed staff by "at least 50%" in most departments, including development, but Johnston disputes the story. "There were layoffs, but nowhere near the numbers suggested by (the Slashdot story)," said Johnston.
The company employs 250 people worldwide, according to Johnston. That includes development teams in Beijing, Tokyo, Slovenia and the U.S. He said product development and services were virtually untouched by the cuts.
"I think this is more about the stock market than about the inherent value proposition of TurboLinux," said Dan Kusnetzky, an industry analyst at International Data Corp. in Framingham, Massachusetts. Kusnetzky said TurboLinux has strong products and a strong position in Asian markets, but the current market circumstances mean it will have to go without the influx of capital that an initial public offering would bring.
Johnston wouldn't discuss TurboLinux's IPO plans, but said the company's business plans haven't changed. He said the company has plenty of cash from previous financing rounds.
The job cuts come as investors have soured on Linux stocks, as well as other technology companies that lack a clear path to profitability. Last month, San Francisco-based LinuxCare Inc. canceled its IPO and announced unspecified job cuts. Like TurboLinux, LinuxCare had widely been considered one of the stronger Linux plays.
LinuxCare was marred by the departure of a number of top executives. And Corel Corp., the Ottawa-based graphics and office productivity software company that has been restyling itself as a Linux company, narrowly escaped running out of cash after its proposed acquisition of Inprise/Borland Corp. fell through. The company last week concluded a financing deal with Vancouver-based Canaccord Capital Corp. and announced a restructuring.
In a more positive note for Linux, developers last week posted a version of the operating system kernel dubbed 2.4.0-Test1, indicating that the software is nearing completion. The much-anticipated new kernel will bring better multiprocessing and better support for Universal Serial Bus devices.