LWN: Comments on "Lindows goes for an IPO - a detailed look"

On the 10 million issue

jneves — Fri, 23 Apr 2004 09:11:57 +0000

The balance sheet is about 2003. The 5.6 million dollars are from 2004.

On the 10 million issue

giraffedata — Fri, 23 Apr 2004 00:54:44 +0000

But how do you square that with a balance sheet that says the corporation's total debts are 4.7 million dollars?

Could it be that the 10 million isn't debt at all, but stock that the company has a gentleman's agreement to buy back some day?

Lindows goes for an IPO - a detailed look

jeremiah — Thu, 22 Apr 2004 13:30:13 +0000

doomed I say...DOOMED! Mabey the whole SCO thing has put a bad taste in my mouth or something, but I just don't see how Lindows can make it. Too much litigation and direct competition with MS. Mr Robertson is being paid far too much for running a company that's burning cash like that. And 38 engs seems like a lot for such a small company. It looks like they don't really know how to leverage OSS. The concept of depending on Wine also just seems like a loosing battle.

free-as-beer windows anti-virus

gyles — Thu, 22 Apr 2004 08:51:33 +0000

There's also AVG anti-virus from http://www.grisoft.com

The Lawsuits

Ross — Thu, 22 Apr 2004 05:01:41 +0000

I think they changed their name to keep doing business. However I don't
think they settled the lawsuits. At least in the US they were having some
success.

On the 10 million issue

jneves — Wed, 21 Apr 2004 17:50:15 +0000

The filling says that Robertson already gave the company 5.6 million dollars in 2004. If you add the possible interest of previous loans, the 10.4 million figure seems about right.

Comments from a Lindows^H^H^H^HSpire user

proski — Wed, 21 Apr 2004 15:52:10 +0000

Sorry, I missed the distinction between "non-free freeware" and "non-free shareware". But then there is Avast, which claims for be free for home users.

Anyway, I'm not trying to dissuade you from trying Lindows. I'm just trying to correct the notion that antivirus software costs money for home users. Windows users should not have an excuse not to run antivirus software as long as they run Windows.

Comments from a Lindows^H^H^H^HSpire user

rjamestaylor — Tue, 20 Apr 2004 19:16:51 +0000

Oops. Dr. Web isn't free, anymore. It costs EUR40 for 1 year (evaluation versions are for evaluation not free long-term use).

RedHat, er, Fedora requires more "know how" than Lindows, er, Linspire, and more hand-holding than I wanted to give my home PC. I want my wife and kids to run the home PC without involving me. This is at their loving request so that they actually have some time with me when I'm actually making eye contact with them and responding to questions within the hour they were asked.

Free as in Freedom is something I'll gladly pay for.

Comments from a Lindows^H^H^H^HSpire user

proski — Tue, 20 Apr 2004 19:06:32 +0000

On the Windows side, Dr. Web is free and includes free updates (both "as in beer", of course). On the GNU/Linux side, Fedora is quite stable, and running "yum upgrade" is no more hassle than running an antivirus in Windows.

Lindows goes for an IPO - a detailed look

piman — Tue, 20 Apr 2004 18:51:21 +0000

Lycoris, not Lindows, was previously called Redmond Linux.

Lindows goes for an IPO - a detailed look

mmarsh — Tue, 20 Apr 2004 18:09:01 +0000

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.

Public investors buy out private ones in an IPO

rjamestaylor — Tue, 20 Apr 2004 18:08:27 +0000

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

In 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.

Lindows goes for an IPO - a detailed look

vblum — Tue, 20 Apr 2004 17:55:06 +0000

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.

Comments from a Lindows^H^H^H^HSpire user

rjamestaylor — Tue, 20 Apr 2004 17:43:58 +0000

Thanks for the analysis, Jon.

Over the weekend I committed my family's Internet PC to Linspire 4.5. (I guess I'm into commercial Linux; I have Xandros on my laptop, RedHat ES 3.0 on my servers). My youngsters will play their Windows-based educational games on a non-networked Windows box (not sure if I will revert to Win98SE or leave it XP Home). I'm quite happy with CNR at $4.95/mo (on going) and the packaging Linspire brings to the home desktop. My wife, a non-technical RN and mother of three, has agreed to participate in GrokDoc's useability study and switch to using Linux (via Linspire) for her usual email, web surfing, letter writing, budgeting, and all-important solitare playing. To me it was either ~$50 a year for Lindows/Linspire or ~$50 a year for anti-virus software on Windows (I am not going to spend time administering my home systems while I can afford otherwise).

Though I may have committed my home PC to Linspire I will think hard before jumping in on the "Refund Michael" IPO, especially with a "going concern" qualification from its auditors. This is 2004, not 1997. While CNR may go away, Debian, the distro beneath the covers, won't; therefore I am confident in my investment. Stocks, on the other hand, stand or fall on their own.

Lindows goes for an IPO - a detailed look

mmarsh — Tue, 20 Apr 2004 17:39:14 +0000

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

vblum — Tue, 20 Apr 2004 17:11:07 +0000

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.