VA Linux Systems, the premier Linux server company continues to suffer from a
string of quarterly losses despite strong revenue growth. VA Linux said the
slowing economy has caused its loss for the current second quarter of fiscal
2001 to be larger than expected. A year ago, VA lost $11.6 million on $20.2
million in sales. The present quarter’s sales are expected to be in the $40-50
million range.
The company’s shares are trading at $9 a share. When it wen public in 1999,
the shares shot up from $30 to $310 on the first day of trading, setting a stock
market record. The issue has been going down almost ever since as investors have
lost their appetite for Linux-oriented stocks.
Company CEO Larry Augustine said that the overall economic slowdown is
hurting sales of all of VA Linux's products, from Linux servers to banner
advertisements on the company's Web sites. Sales growth has also taken a hit.
Instead of an earlier forecast of 120 per cent sales growth in 2001, VA is now
forecasting an overall 60 per cent improvement.