VA Linux CEO Sees Profitability In Software - Eventually - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News

VA Linux CEO Sees Profitability In Software - Eventually

VA Linux Systems CEO says the company can turn a profit by selling software, but not for several more quarters.

VA Linux Systems Inc. can turn a profit selling software, but it won't start booking revenue from those sales for several more quarters, says CEO Larry Augustin.

VA, once a high-flying stock, in late June exited its main business selling and installing servers running the Linux operating system. Augustin, who started the company in 1993 as a Stanford University graduate student, has said the company couldn't crack new accounts after dot-com customers such as eToys Inc. went out of business. Now, VA's trying to survive by selling software called SourceForge, which lets IT managers manage software development projects.

"We believe we have enough cash to get to profitability with this model," Augustin said in an interview at the LinuxWorld Conference & Expo in San Francisco this week. VA reported $82.9 million in cash and marketable securities on hand at the end of its fourth quarter ended July 28. The company lost $290.1 million during the quarter, on sales of $16 million, mostly due to goodwill write-downs and restructuring charges. VA says its first-quarter net loss will be $10 million to $13 million, on sales of $3 million to $4 million.

"People need to realize it's going to take a few quarters to get this whole thing ramped," Augustin says. "Our model's going to look a lot like a typical software company." VA has signed Agilent Technologies, Compaq, and The Goldman Sachs Group to contracts for SourceForge Enterprise Edition, priced at $600 to $1,600 annually per seat, plus installation charges. Hewlett-Packard has purchased a different edition of the product. But VA has booked "virtually no revenue" from these deferred contracts, and doesn't expect to for several more quarters. "We're looking at six- to nine-month sales cycles to close these contracts, if not more," says Augustin.

Augustin says he'll try to keep VA--which plans to change its name--afloat as an independent company, but will entertain buy-out offers if they help shareholders. VA's shareholders are hurting--the stock LNUX-Nasdaq closed Aug. 30 at $1.45, and has been trading below $5 since late May. Its 52-week high was $63.625.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of IT & Cybersecurity Operations 2020
The State of IT & Cybersecurity Operations 2020
Download this report from InformationWeek, in partnership with Dark Reading, to learn more about how today's IT operations teams work with cybersecurity operations, what technologies they are using, and how they communicate and share responsibility--or create risk by failing to do so. Get it now!
Slideshows
IT Careers: 10 Industries with Job Openings Right Now
Cynthia Harvey, Freelance Journalist, InformationWeek,  5/27/2020
Commentary
How 5G Rollout May Benefit Businesses More than Consumers
Joao-Pierre S. Ruth, Senior Writer,  5/21/2020
News
IT Leadership in Education: Getting Online School Right
Jessica Davis, Senior Editor, Enterprise Apps,  5/20/2020
Register for InformationWeek Newsletters
Video
Current Issue
Key to Cloud Success: The Right Management
This IT Trend highlights some of the steps IT teams can take to keep their cloud environments running in a safe, efficient manner.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll