SAN FRANCISCO (03/21/2000) - If investors didn't send Caldera Systems Inc.'s share price into orbit in its first day of public trading, company Chairman and Chief Executive Officer Ransom Love was content this afternoon to watch it bobbing around in the upper atmosphere.
"It's exactly what we had hoped for and we're very pleased," Love said in a telephone interview after the close of regular trading today. "The bottom line is it's not where you start, it's where you end up."
Shares in the Linux vendor closed at US$29.44 today following Caldera's IPO (initial public offering) on the Nasdaq stock market, more than double the original offering price of $14. Caldera's shares had been trading as high as $33 earlier today.
While impressive, the price hike falls short of the tremendous first-day gain enjoyed by systems maker VA Linux Systems Inc., whose shares swelled almost eight-fold when the company launched its IPO in December of last year, and Linux distribution company Red Hat Inc., whose shares more than tripled during its IPO last August.
If there was less enthusiasm for Caldera's stock that's because investors have matured in recent months and grown more cautious, Love said. He noted that 97 percent of investors who the company had spoken with chose to buy shares in Caldera.
"It's not a lack of interest, it's a solid indication of the popularity of Linux. You have so much chaos and so much speculation in the market right now, but we still came out solid," Love said.
Caldera becomes the fifth Linux company to profit from the eagerness of investors to own stock in Linux firms. The operating system, originally developed by Finnish student Linus Torvalds, has been seen by many observers as a potent rival to Microsoft Corp.'s ubiquitous Windows family of OSes, and industry giants including IBM Corp. and Dell Computer Corp. have been keen to align themselves with Linux.
Caldera sells the OpenLinux operating system, and also offers Linux training services. The company reported a loss of $5.5 million for its most recent quarter ended Jan. 31, 1999 on revenue of $553,000.
"Our focus is delivering Internet software and services to businesses, especially in specialized servers and client devices; we see ourselves as an e-business infrastructure company," Love said. Other Linux vendors don't compete in quite the same space as Caldera, according to Love, who sees his main rival as Microsoft.
"It's not that we'll compete with them on all fronts -- they're a giant; all I want to do is smash their toe," he said. Before he smashes any toes, Love said he's taking his family to DisneyWorld in a couple of days to recover for the pre-IPO tension.
At least one analyst today was skeptical of drawing a comparison between Caldera and Microsoft.
Caldera competes more with Unix vendors such as Santa Cruz Operation Inc. to provide operating systems software for departmental servers used by smaller businesses, said Chris Le Tocq, research director with Gartner Group Inc., based in San Jose, California.
Enthusiasm for the Caldera IPO may have been dampened by the suggestion that the Linux market could fragment in the same way that Unix did if distributors like Caldera, SuSe Inc. and Red Hat embellish their products with features that make them incompatible with each other, Le Tocq said in a phone interview today.
"From an investor standpoint, that (suggestion) must take some of the steam out," he said. In reality, Le Tocq added, Linux creator Torvalds probably retains enough control over the operating system to stop it from fragmenting.
Enthusiasm for Linux may also have been diluted by companies who are seeking to position themselves as Linux companies even though they come from a different background, he said. A good example of a company adopting just that approach is Corel Corp. who confirmed yesterday that it is moving away from its Windows-based business in favor of Linux. [See "UPDATE: Corel Posts Q1 Net Loss," March 20.]Caldera, based in Orem, Utah, can be reached at +1-801-765-4999 or via the Internet at http://www.calderasystems.com/.