Lindows Inc has filed an S-1 with the SEC to IPO. It’s an early move that one might suspect was the whole point of the exercise of starting the company. They’re looking for $57.5 million, a sum they figure should last 24 months when it’ll be back to the well for more.
Lindows is selling the expectation that the climate for Linux-on-the-desktop will heat up.
It’s a gamble.
Linux currently hold less than 2% of the desktop market and given the corporate disruption caused by simply moving to the next Windows release, Goldman Sachs reckons there won’t be much movement to a Linux desktop by the mainstream enterprise, other than isolated cases.
Meanwhile, Novell, which is still a billion-dollar company and is trying to learn not to bumble, is dreaming about controlling 40% of the Linux desktop market in ‘07 and, God love them, 20% of all desktops everywhere in ‘09. And then Sun wants 15%-20% of the market for its Java Desktop System by ‘09.
Anyway, the 62-man Lindows was incorporated in July of 2001 - under the name Lindoz Inc actually - hasn’t made any money so far and is $11.9 million in the hole. It also closed last year with $4.7 million in long-term debt and a working capital deficit of $1.8 million.
Revenues in 2003 came to $2 million - up from a mere $63,000 the year before - operating losses were $3.8 million and net losses were $4 million.
End users accounted for $1.7 million of its revenue; the company’s 550 channel partners for a slim $410,774.
There’s $1.7 million in deferred revenues kicking around from last year that will take until 2008 to turn up on the books completely.
Company founder Michael Robertson, who has financed Lindows to the tune of $15 million in the form of a $5 million equity investment and a $10 million line of credit, owns 81.3% of the joint. He of course got the money from taking his last start-up MP3 public and then selling it to Vivendi for $372 million.
One of the primary reasons for Lindows going public is to pay Robertson back his $10 million with $400,000 interest. Lindows says it also wants to develop its distribution channels, expand sales and marketing, develop products and increase staff. The money may be used for working capital and perhaps to acquire complementary products, technologies or businesses.
The prospectus notes that Lindows management has limited experience making acquisitions
Lindows says that 25% of its business comes from overseas - which explains why it was so quick to change its trade name to Linspire when Microsoft started getting court orders blocking it from overseas markets.
Lindows, by the way, just picked up Questar as its exclusive distributor in Italy and is promising to deliver an Italian version of its stuff in 60 days.
To make going to the public coffers more palatable with its followers, Lindows is going to auction off its initial shares through WR Hambrecht + Company, which came up with this auction idea years ago but never really got it off the ground.
Lindows would like its Nasdaq symbol to be LINE
Microsoft, of course, is suing Lindows for trademark infringement and legal costs ran Lindows roughly $1.4 million in 2002. Lindows’ insurer, St Paul Fire and Marine, didn’t want to pick up the bill for the litigation until a court ordered it to. It may appeal that decision after the Microsoft litigation is over.
The insurance company is also willing to pay only part of Lindows’ legal costs from Microsoft’s litigation against it in Finland, Sweden, Holland, France, Canada and Spain. They’re in court over it.
Lindows says it has 38 people in software engineering, 11 in sales and marketing, six in customer service and technical support and seven in finance and administration.
According to the company, starting to call itself Linspire because of Microsoft is its fourth name change.
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