Google's Disappointment Chills Lindows' IPO Ardor 2

Execs postponed their IPO after Google backed off previous estimates of how much it would charge for its own IPO.

Larry Greenemeier, Contributor

August 19, 2004

2 Min Read

Unwilling to cast its lot with what it says are fickle investors, Lindows Inc. on Wednesday postponed an initial public offering that it has been planning since April. Lindows makes a desktop version of the open-source Linux operating system. Company execs wouldn't comment directly on the decision to postpone the IPO.

The decision did come, however, after Google Inc. backed off previous estimates of how much it would charge for its own IPO.

Lindows chairman and CEO Michael Robertson issued a statement that read, in part: "Lindows won't be forced into a cut-rate IPO by a fickle stock market. We are fortunate to have cash in the bank, and we owe it to our stockholders to wait until market conditions and public company valuations improve before we proceed with a public offering."

Lindows is changing its name to Linspire as part of a July settlement with rival Microsoft. It has not withdrawn its S-1 registration statement with the Securities and Exchange Commission, meaning the company can still hold an IPO.

With the market for desktop Linux still nascent, "it's better for Lindows not to do an IPO in a down market," says Bill Claybrook, president of New River Marketing Research and former Linux and open-source research director at Aberdeen Group. "Anyone who's trying to sell Linux on the desktop is going to have a hard time making money because Microsoft has a lock on the market."

In an Aug. 6 SEC filing, Lindows indicated that it planned to make public 4.4 million shares at between $7 and $9 each. In that same filing, Lindows acknowledged that it faces a pitched fight and that the company might never become profitable. Indeed, the company hasn't turned a profit since launching in 2001. "Our business may not succeed because our open-source software business model is unproven," the filing said.

Search-engine company Google debuted Thursday at $98 per share on the Nasdaq Stock Market, down from the company's initial target of $108 to $135 per share, but up from Wednesday's estimate of $85 to $95 per share.

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