Red Hat Shares Leap In First Day Of Trading 08/11/99 >BY Laura Randall
DURHAM, NORTH CAROLINA, U.S.A., 1999 AUG 11 (NB). Shares of Red Hat Inc. [NASDAQ:RHAT] shot up $26 more than their asking price in their first day of public trading, making the largest maker of Linux software a clear winner in an otherwise lackluster week for Internet stocks.
Durham, N.C.-based Red Hat went ahead with its scheduled initial public offering (IPO) today, despite poor debuts by other companies, including Viacom’s Blockbuster unit. Red Hat’s lead underwriter, Goldman Sachs, raised the expected price range for the IPO from $10 to $12, to $14 on Tuesday. By mid-day trading, the shares were at $40.53.
David Menlow, president of IPO Financial Network, called Red Hat’s offering “the best deal on the board this week.”
But whether the company’s share price will continue upward is another question, Menlow told Newsbytes. “It’s still unclear as to whether the hype surrounding Red Hat (as a Microsoft aggressor) will come to any kind of fruition,” Menlow said.
Linux, a fast-growing open-source operating system (OS) that competes with Microsoft’s Windows NT OS, can be downloaded for free on the Internet, but Red Hat offers pre-packaged systems on CD-ROM that allow users to avoid long downloads. Red Hat owns about 48 percent of the Linux distribution market, according to International Data Corp. estimates.
The Linux vendor’s IPO also coincides with the twice-a-year Linux trade show in San Jose, Calif., where Red Hat’s public debut was a prominent topic of conversation among the estimated 12,000 Linux programmers and devotees. On the one hand, Linux fans want to see Wall Street embrace their community-based operating system. But others worry that Red Hat’s “corporatization” could mean the beginning of the end of Linux’s community-based “share and share alike” vision.
The many Linux-related announcements by large corporations at the LinuxWorld event has added to both the attention and excitement over Linux. Among the companies throwing their hat into the Linux ring were: Dell Computer, which said it will offer Linux as an option on several of its computers; Motorola, which announced it will use Linux with embedded chips to create new kinds of computing appliances; and Silicon Graphics, which announced its plans to base a major corporate restructuring around Linux.
Linux’s creator, Linux Torvalds, also made an appearance at the event but declined to take sides in the community versus shareholder debate. Torvalds told the crowd he expects the next version of Linux, version 2.4, to be completed by the end of the year.
Reported by Newsbytes.com, http://www.newsbytes.com .
(19990811/Press Contact: David Menlow, IPO Financial Network, 973-379-5100/WIRES ONLINE, PC, BUSINESS/REDHAT/PHOTO)
COPYRIGHT 1999 Newsbytes News Network
COPYRIGHT 2000 Gale Group