Riding The Dot Com Wave: Penguin Fever

They’re a little lost in the shadow of AOL Time Warner. But the February acquisitions in the US rounded off a series of mergers and moves.


The star of the series was Tux the Penguin, mascot of the freeware Linux OS. 


Graphics leader Corel, which wants to become “the number one Linux company” bought Inprise, née Borland, for $2.4 billion this month. Corel’s PerfectOffice for Linux strategy had been hit by Sun’s acquisition of StarOffice, made free by Sun. Then came the Corel Desktop Linux distribution, and now Corel says its Linux revenues will go up from 5 percent of sales to 50 percent in five years. 


So Borland is now a Corel subsidiary. The Inprise tools for e-com developers are moving to Linux. 


But for Corel, a more telling story lies on the NASDAQ.  Two months ago, Corel shares surged 48 per cent to its 1999 peak, hitting a 26-million share volume. Why? Because of speculation that Corel was a takeover target. Not by Microsoft or IBM, but by little Red Hat.


Red Hat was the first Linux company to go public. Last year it acquired Cygnus, whose tools power much of Linux development, for $675 million, and e-com software maker Hell’s Kitchen for $90 million. Investors clearly believe that Red Hat buying Corel would be great–for Corel.


See the dot com parallels, AOL, et al.? Tomorrow, tiny, swift Linux companies
could buy out conventional software giants. Till then, we have today’s frenzied Linux mergers. The US-based computer vendor VA Linux (its December IPO raised $132 million) has just bought Andover.net for over $1 billion. VA also bought Linux.com a year ago and made it a portal. Intel has now invested in VA.


Why Andover.net? Because last June it bought one of the world’s most popular Linux sites: slashdot.org, then freshmeat.org in August, 
and recently, the Linux tech support site questionexchange.com. 


But hey–Andover just went public in December, raising $72 million–and it sold for $1 billion in February! IPO to acquisition in two months? Corporate life spans are really shrinking in the Net Age.
Also in February, fifteen companies bid for the address Linux.net: it was bought by Linux Magazine publishers Infostrada. 


Like a dot com strategy, Linux spells good news to the financial community today. Now who’s going to go for the line: “We’re the dot in Linux”?


pkr@cmil.com 

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