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Lindows goes for an IPO - a detailed lookLindows goes for an IPO - a detailed lookPosted Apr 20, 2004 17:11 UTC (Tue) by vblum (subscriber, #1151)Parent article: Lindows goes for an IPO - a detailed look Ugh ... to raise money for a company which is burning throuhg its cash fast at this time - seems difficult. Lindows may have been a bit overly aggressive at times, but they certainly have tried to place themselves within a community. It would be sad if they went down at this early stage. On the other hand, I'd much feel better about buying their stock if the money did not go directly into the pockets of Michael Robertson. This sounds like the CEO believes less in the bright future of his company than the size of his private stash of money. The combination of IPO -> Cash for Robertson is really bad PR for the IPO. Well, at least he's forthcoming about it.
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Lindows goes for an IPO - a detailed look Posted Apr 20, 2004 17:39 UTC (Tue) by mmarsh (subscriber, #17029) [Link] I don't see the payment to Robertson as particularly troubling. He used some of his personal money to get the company going, and now that it's going public, and hence no longer "his", it seems reasonable to reimburse him for the seed money so that there's no further entanglement. I'd personally be worried about investing in a company where the BOD ousting the CEO could result in a $10 million lawsuit. 18% of the IPO target seems like quite a bit, but I'd be more concerned with the likelihood of the remaining 82% going to legal fees. If they bring in enough to cover their legal expenses with at least a few million left over, that certainly puts them in a better (and more secure) position than if MS's lawsuits bankrupt them. For the investors, the company then has some sort of validation that what they're doing is legally OK, as well as the psychological boost of "Microsoft tried to destroy them -- there must be something to this Lindows/Linspire thing."
Lindows goes for an IPO - a detailed look Posted Apr 20, 2004 17:55 UTC (Tue) by vblum (subscriber, #1151) [Link] i) Payments to Robertson are not bad per se, but they create a bad feeling in the stomach.In real life (not dotcom-economics), a company should generate a profit, and from that profit (a) repay debt the normal way and (b) pay its employees and shareholders. You do not generate continuous losses as a strategy and look for more investors whenever prudent. Here, the primary investor and motor behind the company is trying to withdraw his capital and have others step in. Not unusual, but perfectly troubling to potential investors before an IPO: Why is he doing this? Does he have doubts wrt the long-term viability of his investment - i.e. profitability of his very own company? (ii) They are doing the right thing about the M$ lawsuits - evade the suits by changing name. Use the money to build a good operating system instead. Robertson's choice of the Lindows name was a blatantly obvious free ride on MS's brand name recognition (remember, the distro was called Redmond Linux first?), and a foolhardy one. Better pull out now than maybe win a drawn-out lawsuit five years later due to technicalities alone, after bankruptcy.
Lindows goes for an IPO - a detailed look Posted Apr 20, 2004 18:09 UTC (Tue) by mmarsh (subscriber, #17029) [Link] I thought it was more-or-less typical that a new company will bleed a little cash while establishing itself. The IPO then comes when it looks like a single big cash infusion would put the company on the path to real and sustained profitability. I have no idea how all of this applies to Lindows right now.While the proposed payment to Robertson might not be the best or most reassuring way to pay off that debt, it's hardly a divestment on his part. He'll likely remain the majority shareholder, and hence will have an interest in the continued success of the company. Minimizing the debts on Lindows' books by or shortly after the IPO might actually attract more investors, since any subsequent debts would be incurred by shareholder-approved actions. As far as the name change goes, I agree that it's better for them to change their product name, which was a pretty blantant gimmick. I could, however, see this having continued repercussions for Lindows, in that potential investors might question the CEO's judgement. Since he'll still be majority owner, it's not like they can buy stock and then force him out.
Lindows goes for an IPO - a detailed look Posted Apr 20, 2004 18:51 UTC (Tue) by piman (subscriber, #8957) [Link] Lycoris, not Lindows, was previously called Redmond Linux.
The Lawsuits Posted Apr 22, 2004 5:01 UTC (Thu) by Ross (subscriber, #4065) [Link] I think they changed their name to keep doing business. However I don'tthink they settled the lawsuits. At least in the US they were having some success.
Public investors buy out private ones in an IPO Posted Apr 20, 2004 18:08 UTC (Tue) by rjamestaylor (guest, #339) [Link] I don't see the payment to Robertson as particularly troubling. He used some of his personal money to get the company going, and now that it's going public, and hence no longer "his", it seems reasonable to reimburse him for the seed money so that there's no further entanglementIn an earlier post I alluded to the use of proceeds as "reimburse Michael fund" and I agree with you that buying out his position is not suspicious or unethical, but is how IPOs work: private investments are recouped and private ownership is thusly transferred to public investors. I Just wanted to clarify that I didn't mean to imply anything shaky was going on.
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