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Red Hat Software Businesses

Red Hat IPO Update 136

Posted by CmdrTaco from the wanna-piece-of-the-big-boy? dept.
malacai sent us a press release that finally gives some good details on Red Hat's impending IPO. 6 Million Shares. $10-$12/share. The Week of August 9 (no surprise that its during LinuxWorld). The symbol will be RHAT.
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Red Hat IPO Update More

Red Hat IPO Update

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  • The actual market value of the company after a $10 IPO would be $660 million. The $60 million is only the part of the company being offered to the public. The rest will be owned by VCs, Intel, and all of the other current investors.
  • Since Intel is already an investor in Red Hat, they own RHAT stock now.
  • But Microsoft owning stock would give them voting rights. If the bought enough, then they may be able to get their people on the board of directors
  • Investing in what you know and/or believe in is a good start but it's not the whole story. The key question is do they have a good track record of turning good ideas/products into a strong brand and generating stock growth?


    Check out The Motley Fool [fool.com] for the whole story

  • Red Hat sells its stock for money, this money is used to expand their business: hiring more programmers and marketers, or whatever.

    If people make money off of buying and selling Red Hat stock, so be it. It's not money out of Red Hat's pocket. The higher the stock price goes, the more money Red Hat has to play with.
  • I really enjoyed your comments but...

    Whilst they won't make Micro$oft amounts of money from selling the OS, they could potentially make quite a bit as Linux gains in popularity (assuming it will). The support side can be rectified, especially with the money that the IPO will bring in. Companies depending on RH Linux would probably be quite keen to purchase support from them, if they're going to get good service.
    They could also negotiate lucrative support deals with hardware manufacturers, simular to the one that Linuxcare have done with Dell(?).

    I may invest a few quid, especially as I got RH6 free off the net - rather them than lining Bill's pockets.

    HH

    PCs are like air-conditioning. When you open the Windows, they cease functioning.
  • I agree with your rationalization, especially where Red Hat's service organization is concerned. But I remind myself about such IPOs as Ebay and Yahoo. What do those stock prices have to do with logic I ask?

    I was a speculator who unfortunately bought and sold Ebay on its IPO day. Bought at 50, sometime later checked out Ebay website and panicked when I realized that I knew nothing about the company except for the media hype, went back to Fidelity and sold at 48.

    Yep, I'm a schmuck, and everyone who's dabbled has these kind of stories.

    But I think for Red Hat's IPO I am armed with a few things: 1. Linux media exposure is large and growing, 2. Linux acceptance in business is growing, 3. Company that has or is headed toward a monopoly in a facet of the Internet (like Oracle, Verisign, etc.) 4. Strong, strong branding. 5. New, fresh place for investors to place their attention (comptetitor to MS).

    I'll be the first to say I have middle-tier sophistication in this stuff, but I've seen lots of opportunities go by where I took a rational approach and lost out because I talked myself out of it (Ebay, Yahoo, the list is long).

    I also think that they still have time to build a great support organization, esp. with all that cash. Is there a clear leader yet?

    Therefore I'm appropriating some speculative capital that's either going into RHAT or into choice "dirty" domain names :)

    -Blanco

  • I really hope that they do well. I am not of the camp that thinks that they are selling out. On the contrary, I think that they should finally be rewarded for the years of holding onto Linux even when it was just a hacker's dream. If it wasn't for Red Hat and the rest, Linux would have never cause Redmond any headaches at all.

    Good Luck, RHAT.

  • "Why I Ph33r The IPO" (Score:4)

    by cswiii ( 11061 ) on Friday July 16, 1999 @08:03AM (#1798700)
    In just a few short weeks, Redhat Software will release its IPO, as it begins its wild ride on Wall Street. The controversy over this,
    inherited, to a degree, from the Linux movement itself, will be an interesting soap opera to observe.

    To be sure, I have a certain hesitancy towards Redhat's public offering; I don't desire to see Redhat become the de facto standard within the marketplace, which certainly appears to be the case, as of late. Regardless of whether or not software is being written that is designed
    solely for a Redhat system (we all know the answer to this), the fact nonetheless remains that the public itself is equating the two as one in
    the same.

    Thus comes the issue of the IPO. Shareholders mean control, it's as simple as that. My fears aren't of an imminent Micro$oftabsorption, either; I'm concerned about Joe Q. Stockholder.

    I had a conversation with an acquaintance of mine recently, who incidentally, does not use Linux. I told him that I was worried about the Redhat IPO; Should Redhat become a psuedo-standard, coupled with public control, the likelihood is that Redhat would head down the path of proprietary OSes.

    His response: "Well, if that's what it would take to see Linux succeed, why are you against it?"

    I tried to explain that such would not be a success, in fact it'd be a complete departure from the whole philosophy. If Redhat were to become a
    standard, what, then has been gained? If I can't run the same application on my debian system at home, if the company can't guarantee that it will
    work outside a Redhat environment, how is that any better than the current situation?

    "But you need a standard of some sort," he replied.

    When I told him that the standard exists within the Linux community,development team, and ultimately with Linus, he shook his head.

    "Corporations don't work that way, though."

    - * -

    And thus, there you have it, from the other side... and many others future stockholders like him share the same opinion. And while I
    don't agree with their goals, I couldn't help but feel he was right. Corporate control eventually becomes proprietary by nature.
    It's as simple as this:

    1. People will use Redhat

    2. Redhat will bow to the whim of its stockholders

    3. Redhat won't be Linux, it will be whatever stockholders want it to be.

    It boils down to Joe Q. Stockholder again. He will invest in Redhat for the money, not for any Linux philosophy. He'll do whatever he can to
    make Redhat profitable. If that means making exclusivity deals with companies to have them only offer support for Redhat, he'll do it. If
    that means striking deals to have software packaged exclusively in RPM format, he'll do it. Nevermind that Redhat code can stay freely
    distributable; If Redhat is can rest assured that third party software/support is available for their distribution, only, how is the end
    user any better off?     In the end, Redhat would end up being Linux by architecture only, not by philosophy.

    Come the day of the IPO, you can bet I'd like to get in on it. But you can also bet that money won't be my main objective.

  • Most shares will be allocated to the firms which underwrite the IPO, and the discount in the offer price is basically a gift to them, in return for sponsoring the IPO, and taking the risk that the company will turn out to be a total con job (they spend a lot of time auditing the books beforehand).

  • Re:What are you talking about? (Score:1)

    by Anonymous Coward
    The higher the stock price goes, the more money Red Hat has to play with.

    Ummm... no! The whole point is that once they IPO at $12, the amount of money that RedHat gets is locked in. After that, demand for the stock will dictate the price that it trades at on the market, but NONE of that money goes to RedHat (unless they decide to dilute the stock further by selling more shares which the company holds). Yes, people on Wall Street stand to make a killing on this IPO, especially considering the additional demand for the stock generated by Linux-folk like myself who want a piece of the action, just to say that we own it.

    However, my overall sentiment is much like many of the other respondents to the original posting. SO WHAT IF WALL STREET MAKES MONEY! That's their job, and if you wanted to badly enough you could too... Buy stock in the brokerages that stand to make the killing, or get a job an Wall Street.

    Besides, don't feel sorry for the programmers at RedHat. If you read the article, the company has reserved shares for founders, employees, and even "friends". They stand to make a killing as well...

  • You clearly do not understand that there are two kinds of people who have money.

    Those that earned it and those who stole it.

    The people who steal the money are attaining wealth at the expense of others. Fortunately, these people are in the minority.

    The people who earn it are doing so because they are adding value someplace, and are being compensated for it. (They could, of course, inherit money from a person like this too) Most importantly, people who have money generally know how to make it work for them. They save, invest and grow their assets. There are people who do not know how to handle their money, and consequently they have less than they would otherwise have. People who do not know how to handle their money, and insist on remaining ignorant of this skill have no one to blame but themselves.


    The average Joe you speak of, could easily learn how to invest and grow their savings. However, I wonder how many of these folks have even thought about how to manage their money.

    I find it fascinating that people bash investors for being wealthy. Would an investor that didn't have much money be able to get a lot of clients ? Doubt it. Would you hire an attorney doing time? Doubt it.

    Investors know how to manage their assets and how to take advantage of every opportunity they have. No, kidding they will use these skills to maximize their holdings. If these skills are used in a situation that is illegal--well that's another issue entirely.

    I guess I don't know why you have a leg to stand on when you whine about people who are wealthy.
  • I think this will be a great investment.
    But I don't have the money.


  • Posted by hurstdawg:


    does it go on the market? Its probably going to go up pretty quick in the first hour or so... wouldn't mind riding that wave...

  • Why couldn't they offer 7 million
    67.6 million wouldn't have given
    anyone an opportunity to find anything
    wrong with it :-)
  • for a leading global investment banking and securities firm - Gold Sacks & Co.

    Chuck

    Buy W2k now! Quanities Limited!!
  • Comment removed based on user account deletion
  • Stock ticker apps on Palm's with wireless connections will probably be everywhere ;)

    But seriously, I wonder how much of that stock will just be snapped up by the bigger companies like IBM, Intel, and, unfortunately, M$?

    I'd love to get some, but I doubt it'll be possible in the frenzy.


    Watch out e-stock brokers, here comes the world.
  • > I wonder how much of that stock will just be snapped up by
    >the bigger companies like IBM, Intel, and, unfortunately, M$?

    I think that RedHat would be really foolish to sell more than 50% of their stock... I'm sure that they'll be retaining control.

    I'm sure everyone will be buying this stock... and that's probably a Good Thing(tm) if the people from Microsoft want to buy stock, then good! More money for Redhat which means more money for Linux devlopment.

    I'm pretty sure that the e-brokers will experience a slashdot effect like none other... Everyone will want in on this... I guess we test how well they hold up then!

  • Well, it's a bit of a gamble if you ask me.

    I think we should play a game called 'guess the 10 day price' where we guess the price per share after 10 trading days.

    I'll go for $25
  • I cannot find anything on Etrade about it. I looked under filings and offerings and RHAT is not even mentioned. But that doesn't mean they are not involved

  • If they had stronger quality testing before stuff goes out the door, then RH _might_ be worth it. Any RedHat x.0 release sucks, and bad stuff still happens on a x.1 (like 'man' segfaulting). Their erratum list is just flat too long to trust the system as a whole.

    The RedHat 6.0 for Alpha stunk horribly. I did 5 installs before I got everything right. If you tell the installer not to init X windows on boot, it won't work properly, set a default WM, and I couldn't open an xterm to save my life... ...all I got was a repeating 'alert' on the virtual console that xinit was run. There was one install in which updatedb and locate didn't work, which makes fixing other problems a pain. It works now, but segfaults happen in something as simple as a badly set 'mv' command.
  • I can see the headlines now. "Microsoft launches hostile take over of Red Hat Software..." Let's see, 6 million shares, let's say that after a few weeks they settle at $30/share, that's a market capitalization of $180 million. Microsoft has $14 Billion in cash (from their FY98 Annual Report) and last year alone, they spent $2.5 Billion on R&D. I'd say a small $180 million "investment" in Linux R&D would fit nicely into the Microsoft budget.

  • that's only 10% (Score:1)

    by Anonymous Coward
    The press release says

    "After the offering, outstanding common will total 66.6 million shares."

    In other words, the IPO is only selling about 10% of the
    company. That puts their valuation at >$600m, 90% in the
    hands of their current investors.

  • IPO investment stragety article (Score:3)

    by afniv ( 10789 ) on Friday July 16, 1999 @08:42AM (#1798717) Homepage
    There is a new article at CNN regarding investing in IPOs and mentions the fact that individual investors do not usually have the opportunity to invest until several days after the IPO when the stock is usually over valued.

    Check out the article at:
    http://cnnfn.com/1999/07/13/investing /q_ipos/ [cnnfn.com]


    ~afniv
    "Man könnte froh sein, wenn die Luft so rein wäre wie das Bier"
  • PHAT is traded, and it belongs to the PHOSPHATE RES PTNRS LP (PLP). Just FYI.
  • > If the[y] bought enough

    Right.. as long as Redhat owns >50% of the stock, then Microsoft wouldn't be able to do anything anyway... They wouldn't have a controlling interest.

    I doubt RedHat would let someone hostile to the company on the board of directors... Something about rival companies.. who knows... I rest assured that any attempt by MS will be thwarted.
  • E*TRADE has a policy that you have to have made 75 trades during the past year to be on the "preferred list" for IPOs. Have you done this? Just repeating what my dad told me.
  • I just download Slackware. Now that Slack 4.0 is out, using the 2.2 kernel, what more is needed?

    (Granted, there's nobody there to hold your hand and the config is done by editing real textfiles. Scary, eh?)
  • I think your insights would be more correct if RedHat was relying on its distribution as their main source of revenue. They claim to make their money off services (support and whatnot). This is a model Wall Street understands (look at IBM, for instance). If RedHat poo-poos the distribution as a clever advertising tool, I believe Wall Street will be more inclined to let it go.
  • First, just my assumption but like all other corp's RedHat is bound by the GPL. It can't un-GPL Linux or it's support code. Second, if it tried there would be a huge backlash that would ruin RedHat faster than they could begin to apoligize. Third, I hope many of the stockholders for RedHat are Linux people who understand the point of free software. I think the idea of free software being able to profit people in such a free exchange system is great. They seem to go together. For once programmers can actually buy (or be given) stock in a free software company and profit from their own code while still leaving it free. This I think is close to being a perfect way of throwing the gold coins back into the Linux community. IMO RedHat should work out a system for paying it's project leaders in stock options and allow them to pass out a portion of those options to others they feel have contributed a lot.

    Personally I plan on buying as much RedHat stock as I can over time with the sole intent of just holding on to it. If the Linux community buys up the stock then we can make sure we keep control of the stock. RedHat giving first chance to big businesses kind of pisses me off although I'm certain it's just doing things in the usual manner. They should only offer the stock options to Linux friendly companies to begin. Would be good to see Caldera and others buy up a large chunk.
  • The above comment is very good. I'm just not a moderator. :)
  • There will surely be secondary offerings of RH stock which will increase the amount shares available to the public. Most of these tech offerings include a small IPO with more shares offered after the price has been driven up. $10x6 million shares is chump change in the internet crazed market. Such a small offering just drives up the price so the insiders at Red Hat can make more money later.

    Regardless, even if M$ could only buy 10% of the stock - they would have a seat on the board and they could make life hell for Red Hat.

    I think the open source /linux community needs to be very careful of what it means to be a "public" company. I think Linus, A.C. and all the other cool people that have poured their lives into linux deserve to get rich but it will come with a cost (to linux, open source, and freedom (as in speech)).
  • 180 days for officers and exercised options of employees. And if you do the IPO and drop more than a small fraction of your shares, they won't let you in on the next IPO.

    Most people would be better off, if they can't get IPO shares, to wait for a few days/months until there is a dip. Probably a multiple of the IPO price (e.g. if $12, then figure $20-$30 range), but cheaper than end of first day ($40?).

    If you do make a first day offer, make it a round lot (100 share multiple), and market order, as a limit probably won't exercise in time.

    Anything other than a market order probably won't work.

    Will in Seattle
    who bought some Salon.com at less than the IPO (9 1/2, IPO was 10, but that was a dutch auction)
  • Why do you think people like Alan Cox went to work for RedHat in the first place? Not for the salaries - I remember reading about Rasta (before he quit) making some totally lame salary there - don't remember the exact number, but it was LOW.
  • But if you're using a retirement account (IRA, Roth IRA, 401(k), 403(b), SIMPLE IRA), and can buy/sell individual securities (e.g. stocks), this does not apply. There are no capital gains.

    Will in Seattle
  • On the application forms, did you (honestly) say you make 75 trades a year? Remember, this form gets copied to the SEC, so there's jail time if you lie about your true risk level ;-)

    Me, I actually make that many in all the accounts.

    Will in Seattle

  • Buy it for what it stands for... (Score:3)

    by Deega ( 41540 ) on Friday July 16, 1999 @09:39AM (#1798742)
    When investing in Redhat you are investing in OSS. You are investing in a philosophy, a change in the way a corporation works. So far, Redhat have been good players in the community, why would an IPO make them any different?

    Ben and Jerry's Ice Cream is a similar corporation. They donate 7.5% of their profits to what they consider worthy causes. Does this piss off the stockholders? No, it's an understood that Ben and Jerry's stock is more of a movement than a way to get rich. The stockholders believe in B&J and what they are doing. They show their support for this company by buying stock.

    So show your support for opensource and Linux and dump a few bucks into the Stock.

    Redhat releases their code under GPL, the onlyreal way to keep investors happy is to have investors that believe in the GPL/Opensource.

    Maybe they will even throw a cool annual party for stockholders.
  • Who (like my family), invest money even when they're not well off, don't spend a lot, make their kids work, and don't wear fancy clothes or do most of the things people think wealthy people should do.

    I never fly first class (use my miles for more trips), hate to pay for parking, take the bus, have never bought a watch worth more than $30, only buy clothes on sale, and my only major expense is charitable donations (and some non-tax-exempt political ones).

    Which is typical for the majority of millionaires.

    Yes, the system is biased in favor of those with wealth. And I don't agree with cutting the estate tax rate, even though it has cost everyone in my family a lot of money, because someone has to pay taxes!

    And, in case you wonder, some of us have been very poor in our life as well. Which helps one keep one's moorings. I still have a hard time spending money, unless it's for education.

    Will in Seattle
    P.S.: Read "The Millionaire Next Door"
  • If you want to find out the folly of the game called the IPO; you should check this out http://www.fool.com/Specials/1999/sp990316AboutIPO s01.htm [slashdot.org] These people are pretty good at the game... -m0ng00se
  • It was the second page, last question, about options and margin accounts. This is where you determine your risk level, and it is also used to determine your IPO qualification.

    think it was something like: 0-9 trades/year, 10-24 trades/year, 25-74 trades/year, 75+ trades/year.

    Will in Seattle
    don't you hate it when there's a trick to filling out the forms ...
  • I think you're right on the money. Open at $12, peak above $40, drop to low-20s in a 30-190 day window. Any cash left over from my $150K is going into limits to buy in the low-20s.

    Probably won't kick in for a month or so, but still a good investment.

    Will in Seattle
  • Quote.com's IPO resource is interesting, but I wouldn't bet the farm (or not bet) based on their analysis.

    I checked out a few Witcapital.com offerings that have been very good to me, and they had lukewarm ratings on Quote (STMP and MLTX if you are curious). They also gave their highest rating to BNBN, which has been a bit of a dog.

    Thanks for sharing though, I like to evaluate all the tools I can find out there.

  • Regardless, even if M$ could only buy 10% of the stock - they would have a seat on the board and they could make life hell for Red Hat.

    I doubt it...like someone said, it would be easier to make their own distro (or possibly even a *BSD, as the licensing would be a little more favorable in their point of view) than to buy a significant amount of Red Hat stock (why not spend the money on subsidizing their own distro?).

  • Sure you might make some money flipping it, but the numbers look pretty scary.

    Total common is 66.6M (6M being sold). IPO at $10-12. That's a capitalization of $700M or so. $20 would be approx $1.3B ...

    Last years revenues were $10M or so (earnings around zilch), which would put the price/sales at 100. Or looking at it another way, even at a pretty high P/E of 50 they'd have to be earning $20M to justify a $1B market cap...

    Bear in mind too that they only dominate in the US. SuSe (which has higher sales than RedHat) dominates in Europe. Pacific HiTech in Japan.. They're also not getting many takers for their service contracts (revenue was practically all sales), and their product can be bought for $1.99 from www.cheapbytes.com (vs $70 or so from RedHat)....

    Looks scary to me as anything other than a short term gamble.

  • I think your insights would be more correct if RedHat was relying on its distribution as their main source of revenue. They claim to make their money off services(support and whatnot). This is a model Wall Street understands (look at IBM, for instance). If RedHat poo-poos the distribution as a clever advertising tool, I believe Wall Street will be more inclined to let it go.


    That's my point though. If RedHat makes deals with software companies who in turn only offer support or guarantee their installation will work with a RedHat distribution (we've all seen the evidence of this), Redhat will indeed make their money off of support -- support for the RedHat brand only, thus at the expense of the rest of the Linux community.

    Again, who really cares if RedHat allows their distro to be freely released? RedHat won't, if they can still sleep comfortably knowing that they'll get their millions, if theirs is the only distro for which the myriad of software suites will be guaranteed... and what good, then, does that do for the Linux movement -- or users -- in the end?

  • I see your point regarding RedHat's revenue, but when has that had any real influence on trendy stocks. I see Red Hat following the trend presented by Yahoo, EBay and Amazon - profits don't matter, its the trendiness that matters. Every IT anaylist on Wall Street may be watching Red Hat with the hopes of it being the next EBay/Amazon. Why? Beacause Linux is trendy. Not necessarily in a mainstream way, but every IT magazine has at least touched on the hype of Linux. Even my father, an old mainframer, is eyeing the Red Hat IPO.

    Now I know hype isn't everything in the IPO game, but look at amazon. Their stock soared without the company making a profit. Why? Because the idea was cool. Red Hat may fall in just the same boat. If it can maintain financial stability, not necessarily success, then the hype factor may increase its value alone.

    My personal prediction is this: opens at $12 peaks at $45-$60 and after a little while (3 months) drops to $20

    Me, I have a couple other trendy stocks I'm watching out for.
  • Okay, I admit it. I've never traded stocks. It's because all the places I've seen require at least $1000 to start and I can't part with more than $250 at most. I'm stuck playing along on Yahoo's investment challenge game wishing I could do it for real. Is there any place online that lets you begin with little money and I hope still has small transaction fees? I'm dying to buy some RedHat and MP3.com stocks as soon as I can. I guess maybe you aren't a serious investor until you can spend $10000 on it but hey I'm poor here! :)

    Also I hope to see more investment software coming out as free software now. Anybody here tried software by Omega Research? I'd like to duplicate and extend that. Possibly give it a web interface. Would be awesome IMO. :)
  • AFAIK, the bare minimum is $1000 to open an account with a brokerage, online or otherwise. In your situation, buying stocks isn't the greatest idea - these are volatile stocks in a volatile market, and the companies have uncertain futures at best. The intent of the minimum account investment is not to say, "We don't care about you if you don't have $XK," but rather, "Securities trading isn't a good idea if you can't front $XK."

    For example, ETrade charges $15 a trade - if you were to invest $250, and buy into RH and MP3, you'd have put 12% of your investment into fees. You'd also spend that again getting out, which means that your investment of $220 would have to grow by 27% for you to break even. Even without considering risk, the economics don't make sense.

    However, as an AC pointed out, the minimums are usually waved if you open an IRA (Individual Retirement Account). An IRA might seem like a bad idea, since you only have a little money to spare, and you are so far away from retirement, but it isn't necessarily. A Roth IRA, in which you invest after-tax dollars, is a great idea, and $250 would be enough to get started. It has the following advantages:

    1. Tax-free growth (you've already paid taxes) - this means that you don't pay any more taxes, but also that you don't have to plan an investment strategy around minimizing taxes - yay for capital gains.
    2. Wide variety of investment options - you can open an IRA and put money into any number of investment options(stocks, bonds, mutual funds), many of which you couldn't get to otherwise without a large initial investment.
    3. You can get the money for a first-time house purchase - up to $10,000 of your total IRA, if you've held it for five years. You can also get to the money by paying certain penalties, but that isn't a good idea.
    4. It isn't too early to start retirement planning - remember, the longer that money grows, the more it grows. I still wouldn't invest in stocks. My recommendation would be to forgoe the Dreamcaster, put the $250 in a Roth, drop it into a mutual fund, make contributions when you can, and watch it grow.

      Assuming an average ROI of 13% (a reasonable average), that $250 sitting for 40 years would be worth $33K. Assuming 4% inflation (a high avg), this would be a 1900% ROI.

      Also, you won't get an initial issue, so none of your money will get into RH's hands. You'll buy it from some wealthly investor who got into the IPO for a quick buck - your buck. Always invest with a plan - listen to your heart, but invest with your head.

      And no, I don't do this for a living - I'm just bored at work.

      -Josh

  • The contours of the new American class system are strikingly similar to those of Edwardian Britain. There is a small number of mega-rich, followed by a very large and comfortable upper middle class. At the bottom comes what Karl Marx called the lumpen proletariat and what we call the underclass. In the middle, a large number of the respectable poor is divided between those who fear dropping into the underclass, those who still aspire, and the vast majority who know that they are stuck in their station and suspect that their children may be stuck as well. The traditional mechanism of social mobility, the public school system, is laboring, and the cost of a college education is soaring. At the same time, median incomes are stagnant or dropping. Copyright © 1996 by The American Prospect, Inc.

  • On the application forms, there was no question as to how many trades I make a year. They asked me to rate my level of investing knowledge and experience, subjectively. I answered as honestly as I could.
  • I got an E*TRADE account hoping to take advantage of the Red Hat IPO among others.

    Anyway, after frustration with their IPO web pages, I poked around and discovered this web page [etrade.com]. You need to be a E*TRADE customer to see it. I quote "Red Hat has set aside a certain number of shares in its initial public offering for purchase online through E*TRADE by certain members of the open source community." Another quote, "Red Hat has chosen certain people that the company feels have contributed much to the growth of the company to date. Red Hat wishes to provide these people with the opportunity to purchase shares of stock in the company at the public offering price, should they wish."

    Will any of the Chosen Ones speak up? Should the rest of us forget about it?

  • I mean how many people out there are actually gonna go out and spend $50 on RedHat x.x compared to the number who will dl of the net, or get a cheap CD?

    Buisiness will buy it. And, even though they only have to buy one copy, and use that one copy on each of 1000 computers, businesses will still buy 1000 copies, one for each computer.

    Why? You got me. But they will, and do. I guess it helps them sleep better at night or something.

    And Red Hat is supposed to be targeting business, right?

    Also, I was in the bookstore the other day, and ran into a guy that had RedHat6.0 in his hand, for $80, and I said, "You know you can get that for $1.99 at cheapbytes.com. It's the same exact thing" and he said "Yeah, but I need the documentation and phone support"

    Come on. Is the support and docs really worth $78?

    I bought my first Linux distro at the store, too (but my boss paid for it), so I guess I can't really talk.

    People new to Open SOurce are trained to BUY STUFF and PAY FULL PRICE. They like to have the box. Go figure.

    -geekd
  • Red Hat's common stock is devided into 66 million shares. This stock is owned by the company which in turn is owned by the original investers, founder, and some of the employees. The Company Red Hat will sell part of it's self at an initially fixed price. Now this money goes into the companie's bank acount so they can use it to expand etc. Once the company does this, each of it's owners sudenly can sell their portion of the company as common stock on the open exchange. If you owned 10% of Red Hat prior to the IPO you will own 6 million shares which you may now sell (actualy there are a few restrictions by the SEC on the time frame of this). It is the owners of Red Hat who make fortunes and they could not do it without Goldman Sacks (sp?).

    counterpoint: It is worth noteing that G.S. has the 2nd highest profit margin of any company in the world after Nintendo.
  • Microsoft only owns 15% of apple but that's still enough to efectivly control the company.

    e.g., Internet Explorer bundled to the MacOS

  • Red Hat IPO Not going to be available to most... (Score:3)

    by dzawitz ( 2120 ) on Friday July 16, 1999 @06:32AM (#1798770)
    People,

    IPOs of this nature (meaning incredibly hot, as I predict Red Hat's will be) just don't get sold to individual investors, at least not at the IPO price. Typically, large firms like Fidelity get a certain number of shares immediately, and allocate them to their biggest clients. I'd be very surprised if any individual investor (especially a linux user, we don't tend to rake in the big bucks, at least yet) gets any shares at the IPO price.

    Keep in mind that the price will shoot up in the first few days and then cool off. After that I see Red Hat as a very viable investment.

    Be careful, though.
  • You usually will not be able to buy any shares before noon when such hot IPOs debut. This is no place to estimate stock prices, but based on my previous experience with tech IPOs, I would say RedHat would probably be available in the open market in the range of 40$ per share or something; if not way higher. The only way to get in at the offering price (I believe it will be raised from $10-12 per share, it is too low.) is either to use WitCapital if they offer the IPO, or to open an account in an online broker which will offer the RedHat IPO.

    There might be a whole lot of rich Slashdotters around by the end of that week.

  • Short Term || Long Term (Score:3)

    by a.out ( 31606 ) on Friday July 16, 1999 @06:36AM (#1798772)
    The question still remains, Long or Short. There will be an initial excitement that will pump up the stock price. But since the open source buisness model is a 'new' concept major investors could be jiddery driving the stock price up and down based upon financial speculations. Everything that Redhat does that week and following IPO will be watched extremely closely.

    If Redhat makes a decision that's "Good" for the community but may be "Bad" for profit, stock prices will fall period, that's the way of life. Will RHAT be pressured by investors? I see no reason why they wouldn't be. Who would you listen to if you had millions at steak?

    A good idea and a great product help out with things a lot, but take a look at AMD from the long term perspective. They released the K7 (better than sex, P3 killer) and their stock barely moved a couple of dollars. AMD has a great product but has been plagued by business and production problems keeping investors scared.

    IMHO RHAT has a kick-ass product (better than sex, Win killer). But their business model must be rock solid inorder to suceed. They've got a tough balancing act to perform here and I really hope they pull it off. But the bottom line is, I'll be buying my shares - long or short I do not know.

  • Will probably open at a large premium. (Score:1)

    by Anonymous Coward
    The stock will get priced at like $15, but the first trades will be at $60. The people who
    got allocated it at $15 will have a 400% profit the first second. Who says rich people don't work hard?

  • Better than sex (Score:1)

    by Anonymous Coward

    My friend, you're clearly doing it wrong.


    OTOH, what do your comments suggest about running RH Linux on an Athlon? A system that cannot legally be used by someone younger than 17?

  • Buy at IPO or wait? (Score:3)

    by blanco ( 17303 ) on Friday July 16, 1999 @06:52AM (#1798779)
    I'm certain I want to own RHAT, although I don't know much about how strong their service division is and is going to be, the marketing is certainly there.

    I plan to try to get the 100 pre-IPO shares that will be offered to select E*Trade members. I believe E*Offerings is co-underwriting the IPO, and will offer up shares to E*Trade customers on a "lottery" basis.

    Chances are though that I can't get that magical "$10-12" price that almost no one get. So do I buy at IPO or wait?

    I have been keeping an eye on this in Silicon Investor's site [techstocks.com] (search for Red Hat) and at Quote.com's IPO Edge [quote.com].

    The IPO Edge analysis might be interesting to anyone considering this IPO. RHAT is given an "unfavorable" (-4) rating (range from -5 to 5). The rating appears to be a combination of metrics about how well the lead underwriter has performed in the past, and similar deals/IPOs. The overall rating is a guess of how strong your investment performs after a year.

    In general, it looks like the people who "flip" a Goldman Sachs IPO get an average return of 53%, but if the hold on a year the average is 1%.

    I am left wondering, however, the performance of Goldman Sachs-underwritten Internet IPOs.
  • I just don't understand all the Hype Slashdoters are giving RedHat. I just don't see how the company is going to make money. What is their product? I've seen several possible answers to this question, none of which I particularly like:

    1) They will sell linux
    How can you sell a product that is avaliable for free? At least how can you sell it for much more than minimal cost (ala CheapBytes.com). I mean how many people out there are actually gonna go out and spend $50 on RedHat x.x compared to the number who will dl of the net, or get a cheap CD?

    2) They will sell advertising on a Portal Site
    RedHat.com can't get *that* many hits, and even if RedHat Linux becomes hugely popuoar, that doesn't mean it'll get any more than it does now.

    3) Service/Support
    This is the most popular answer, but I'm still not sure what it means. Is RedHat goning to try to be like LinuxCare? Maybe, but I just don't see that much of a business in answering phone calls all day to help people get the latest version of Mozilla working.

    I think Linux is a great OS, but a bad financial investment.

    -Harry
  • well...lets look things as they are now...Amazon claims to be losing millions per year..yer their stock price is in the stratosphere...why??? certainly not because they have a great P/E...people are banking on the future..people are afraid they will miss an opportunity to buy *coke* or *GE* at ground zero. It's the same with RedHat. These are different times...It's fear...hype...momentum...etc..not always the bottomline.

    Who's to say if this will be a good long term stock? I certailny don't have the wisdom to make that call. But I think it's as good as anything else out there. If RedHat takes the money and really cranks out some amazing stuff then they will make money, and the stock will be a good long term investment.

    OTOH..if Linux burns out..or RedHat falls from grace...then poof...you loose. So buy into the hype...roll the dice and live large :)
  • well said!
  • (This is from memory, so forgive me if I'm not 100% right) At etrade, they discourage quick sells of stocks bought in an IPO. They "require" you to hold them for at least 30 days. Of course, they can't prevent you from cashing in early... you own the stock after all--it's yours to do with as you wish. However, they warn that selling early will affect your eligibility to participate in future IPOs through their brokerage.

    --

  • Just look at it like this...(it's simple): The golden rule of investment without regret is to invest your money in products and companies that you A) enjoy or B) believe in.
    Do not make it as complicated as the Wall Street broker-types would like you to believe it is.

    If you are in it just for the dough...THEN it gets complicated, because you have no gut feeling to go on, just data presented and the proverbial 'word on da street'

    So the question remains: Do you believe or revel in Red Hat enough to make the decision of investment in them a non-issue? Yes? then *DO* it (no matter whether or not you're pissed off about not getting in on the IPO)

    In short: Get behind those people who make your life fun.
  • I'm wondering about the pronunciation. Is it
    (or, will it be) AR-HAT, ur-HAT, or (silent "h")
    RAT? I prefer the lattermost, mainly because it
    is monosyllabic and ends in a hard consonant (like
    a lot of "effective" expletives).
  • Just look at it like this...(it's simple): The golden rule of investment without regret is to invest your money in products and companies that you A) enjoy or B) believe in.
    Do not make it as complicated as the Wall Street broker-types would like you to believe it is.

    If you are in it just for the dough...THEN it gets complicated, because you have no gut feeling to go on, just data presented and the proverbial 'word on da street'

    So the question remains: Do you believe or revel in Red Hat enough to make the decision of investment in them a non-issue? Yes? then *DO* it (no matter whether or not you're pissed off about not getting in on the IPO)

    In short: Get behind those people who make your life fun.

    -Chuck G.

  • Snap up about $4,000 worth as soon as I can on IPO day. I'll be ready at my Datek account at 6:30AM PDT.

    Put in a limit order to sell it at double what I pay for it. Goes through in a couple days. Maybe a week.

    Rush off to buy a NICE new computer with my $4K profit.

    Wait until stock goes back down to about 50% above IPO price. Buy. Hold long term.
  • I know because the family broker at Morgan Stanley Dean Witter was concerned that we might be lucky to get 100 shares in that account (we're down for up to $100,000 if they can get it) and mentioned the three underwriters, of which is E*Trade is the only one most slashdotters could access.

    So, I cut a check for $50,000+ to them a couple of weeks ago. I'll see how much I can get. Might have a chance, as my account size is twice their average and I already trade more than 75 times a year.

    Strange as it sounds, I do long-term investments.

    Will in Seattle
  • First off let me say that I agree with Yoshi's statement above. If you can only afford to gamble with $250, you should probably be looking into other investment options. I'd also like to remind you that you should never trade with money you can't afford to lose.

    Having said that, if you really want to invest in stocks, and are looking for a cheap way to do it, I'd suggest DLJ direct [dljdirect.com]. There's no deposit for most people, no opening or monthly fees, and they've got fairly decent information on the site. They have won several awards, they have the free Marketspeed software [dljdirect.com] (which is pretty decent), and I've been using them for a few months now without a problem. I was recommended to the site by a friend, and the quality is definitely high enough to recommend to anyone else.

    The only problem is the commision. $20 per trade won't kill you, but it's definitely NOT the cheapest out there. The value of your purchase has to increase by $40 just to break even. For neophytes and day-traders, that can kill any hope of making a profit. I personally hold my stocks a while, and don't trade much, so it doesn't get in my way (I earned about $25k after taxes last year. Not a fortune, but a nice bonus on top of my regular salary).

    I'm also making a killing on my MSFT holdings. Before I get flamed: I don't look at it as "supporting" MS, instead it's the ultimate Windows refund :)
  • Heh, the startup I work for is looking at office space in a building adjacent to e-trade's in Palo Alto. It'd be convenient to walk over there during an outage of some sort and ask, "Can I log in from here? I really gotta make a trade...please? No? Damn."

  • I dont claim to know everything about how this works, but from what i do understand, If the price is to go up instantaniously, then RH should be selling it at that price initialy. An IPO is designed to put money in RHAT's pockets first, and the investors seccond.
    Erik
  • This IPO gives out about $60M in stock. It gives out about 10% of the total stock. From this we can deduce that Red Hat is supposed to be worth about $600M.

    My previous estimates for what Red Hat would be worth came to an amount of about $20M - $60M for the whole company.

    So my opinion is that the stock is highly overrated.

    Now the stock value can reflect an "expectation" value, and if the "doubling every year" (which they claim on their website) continues, any price is reasonable on the long run.

    Anyway, I don't deal at stock markets. I don't buy stock. I just calculate total-company-value for fun. Just ignore me.

    Roger.
  • Netscape-Enterprise/2.01-p100 on Solaris, for the front door anyway

    Chuck

    Fortune cookie # 847298374

  • It says IPO shares will be made available to, among others, friends of Red Hat.

    I'm a friend, really I am! Can I get some please? :-)

  • Don't get me wrong, I've been using Red Hat for years, and think they're a great company. However, that doesn't necessarily make them a good investment. They can't make huge amounts of money from selling the OS, so they need to have other sources of income. IMHO, they've missed the boat a bit on the support side. People are going to get support from LinuxCare, Compaq or HP -- not Red Hat. So that leaves little other than their "portal" site to bring in revenue.

    Sure the share price will rise in the short term amid the traditional hi-tech IPO frenzy, particularly with all the open source media attention. But I wouldn't be surpised to see it dropping down towards the issue price in the medium to long term. Good for those looking to make a quick buck, but I wouldn't view it as a long term investment...

  • I'm in.

    I sent my check in to E*TRADE yesterday to open an account, and I'll soon send some additional cash to make sure I get this IPO, even if it prices above the $12 high end of the range (unlikely). Based on past credentials, E*TRADE investors can get 100 shares of an upcoming IPO when it prices.

    As for Red Hat being a long-term investment, I firmly believe that they can last. Everyone here is always talking about (1) how fast Linux is growing, and (2) how Red Hat is becoming the Microsoft of Linux. If this second point is true, then as an investor I'm all for it! Microsoft's stock has skyrocketed in a long term view.

    I figure, why not profit from Linux's rise to power? I'm putting my money where my mouth is as soon as I get account-opening confirmation from E*TRADE. I just hope I can get my 100 shares.
  • If i'm not mistaken, the name is Goldman, Sachs & Co.

    -awc
  • $10-$12 a share, multiplied by 6 million, is quite a nice bit of spare cash to have. Hopefully, a significant amount of this will be spent on improvements to Linux. I really hope that some of the people who put in the real work behind the scenes (like Alan Cox, for example) benefit from this. After all, it's their contributions of free source code that have allowed Red Hat to build their business.

    Free shares for significant Linux contributors would be a Very Good Thing (and no, I'm not one myself - wish I was).

    HH

    date; talk; touch; unzip; finger; expand; strip; mount; yes; yes; yes; eject; more; sleep

  • Yes, usually your broker will penalize you for "flipping", i.e. selling the shares you bought at the IPO price. As a result, they might make it hard for you to get shares at the IPO price again.
  • Amazon.com anyone? The ONLY reason I didn't buy Amazon right after the IPO is because I was worried about competitors like Barnes&Noble kicking their butts.

    Slaping self over the head,
    Micah
  • D'oh. That was me -- for some reason my login didn't take.
  • Just not many. 91% will still be held by the initial investors and other shareholders (directors, employees with options, friends who own hat making stores, etc.).

    Will in Seattle
  • Cause my son only gets Scottish ancestry on his dad's side.

    Will in Seattle
  • Seriously, during the Reagan years, the whole coutnry ran up everything on credit. Almost bankrupted the country with useless trinkits for the rich.

    Now the current GOP crop wants to "give back" $1 billion, instead of paying off the national debt or funding the programs for all the old fogies.

    Sheesh!

    Look, try living in another country and you'll NEVER say that we have high taxes. We have one of the lowest tax rates in the world, and you should be darn grateful to pay your taxes.

    Will in Seattle
  • OK, some is for my son, for each day in the summer he does his homework perfectly (1 share/day), but the rest is for me.

    Pikachu, I choose you!

    90 million Japanese gameboys can't be wrong.

    Will in Seattle
  • I follow the Motley Fools myself, and agree with most of what they say. Especially their take on debt and investing (first pay off your credit cards), retirement accounts (max them out), and many other things.

    I just happen to think that this is one of those rare IPOs that I can see lasting for a while, in a company I understand, and in an industry I understand.

    Caveat Emptor!

    Will in Seattle
    P.S.: If you don't speak Latin, you must not be Latin ... (apologies to George Whitey Bush)
  • E*TRADE is one of the underwriters; I just filed to open an account with them yesterday. Although they're certainly not the cheapest in terms of commissions, I hope they'll do their best to entertain offers of interest in multiples of 100 shares.
  • I'm interested, just wondering which internet stock trading system is the most preferred??
  • It'll open at a huge premium for sure. A lot of people will buy it just to ride the first 10 days inflated price. The only way that ordinary people will get in on the IPO itself is if they offer it via mail or electronic means. I got in on a few IPO's while I was an undergrad this way... mail them a cheque for 500 bucks and you get 40some shares. It doesn't look like they're doing this though.

  • Followup:

    E*Offering [eoffering.com] doesn't seem to have any info on Redhat in their IPO Calendar. E*Offering does have some other interesting stuff though.

    The Red Hat IPO press release [redhat.com] does in fact say that E*Trade is one of the underwriters.
  • Note that the ticker symbol is one small penstroke erasure away from being PHAT. I can see the headlines now: "RHAT's phat IPO" (As far as I can tell, no-one actually has ticker symbol "PHAT" either...)

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