Caldera IPO Marks First Linux Disappointment

Caldera Systems, Inc. began publicly trading its stock on Nasdaq Tuesday, closing up almost 111 percent in a $70 million (US$) IPO that fell short of other recent Linux offerings.

Caldera raised the price of its common stock to $14 late last week — just days after an increase to between $8 and $10 a share. Expectations were high because the company’s Securities and Exchange Commission (SEC) filing for an initial public offering in January of this year quickly attracted investor interest.

Trading under the Nasdaq symbol “CALD,” the stock opened on The Street at $26 a share and hit a high of $33 in heavy trading that seemed to defy an early Nasdaq Composite loss of .9 percent.

Not One for the Record Books

Although the offering lived up to some analysts’ expectations for a strong showing, Caldera failed to repeat the meteoric opening performances of Red Hat, Inc. (Nasdaq: RHAT), Cobalt Networks, Inc. (Nasdaq: COBT) and VA Linux Systems (Nasdaq: LNUX).

Red Hat went public in August 1999, creating what many experts have labeled “Linux hysteria.” The North Carolina-based Linux vendor closed up 371 percent at the end of its first day of trading.

Server appliance developer Cobalt Networks, Inc. experienced a jolt of almost 490 percent in its first day on the Nasdaq in November 1999. However, VA Linux shattered the mark in early December 1999, when it closed up almost 700 percent.

The stocks of both Red Hat and VA Linux have dropped significantly in recent weeks — by as much as half at some points — but some analysts feel that the declines are due to an overall downward shift on the tech-centric Nasdaq instead of decreased investor interest in Linux.

Robertson Stephens, Bear Stearns & Co., Wit Capital Group, Inc. and First Security Van Kasper handled the Caldera Systems offering. According to a company statement, “net proceeds will be used for general corporate purposes.”

On Deck

Linux is far from finished with Wall Street, however, and there are numerous Linux-related offerings coming up, including Cybernet Systems Corp., Lineo, Inc., Linuxcare, Inc., SuSE and TurboLinux.

Startup LinuxOne, Inc. has also filed with the SEC for an IPO, looking to raise $24 million through the sale of three million shares of its common stock. Members of the Linux community have harshly criticized the offering in light of the company’s lack of experience, resources and income, however.

The Orem, Utah-based Caldera Systems designs, develops and markets Linux-based business and desktop solutions, including OpenLinux, NetWare for Linux and Linux technical training, certification and support.

The company moved to become something of an e-commerce enabler in January of this year with the launch of its OpenLinux-based eServer 2.3 at LinuxWorld Expo in New York City.