Will Linux IPOs Revive the IPO Market?

With the growing commercial interest in Linux, the inevitable IPOs appear. Red Hat Software is the first of the Linux IPOs, expected to be traded on the Nasdaq market this week under the symbol RHAT.

The Red Hat IPO, as well as the possibility of future IPOs by fast-growing Linux companies, could revive the troubled market for technology stock offerings. Technology IPOs have seen substandard performance this month, often closing at less than the offering price. Internet IPOs have been hit especially hard because of the lingering uncertainties regarding profitability. Linux companies may have to face the same scrutiny, especially the Open Source software companies who will have to convince investors that the free software model is profitable. Linux-focused hardware vendors will have less of a problem, but they will still have to answer to the possibility of competition with the more established OEMs.

However, the upside potential for these Linux companies, and the general excitement for Linux in general, will make these IPOs lucrative assets. Companies such as Caldera Systems, SuSE, and VA Linux Systems are rumoured to have IPO plans, making a wave of high-flying Linux stocks a possibility. In fact, a surge of IPOs in this new market could provide much-needed fuel for the technology sector.