SourceForge, Inc.

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SourceForge, Inc.

Type	Public (NASDAQ: LNUX)
Founded	1993
Headquarters	Mountain View, California
Key people	Ali Jenab, CEO
Industry	Software & Programming
Products	SourceForge
Revenue	▲$43.632 million USD (fiscal year 2006)
Net income	▲$10.962 million USD (fiscal year 2006)^[1]
Employees	127 (2006)^[2]
Website	www.sourceforge.com

LNUX stock price (December 9, 1999 through December 9, 2000)

SourceForge, Inc. (NASDAQ: LNUX), formerly VA Software Corporation, VA Linux Systems, and VA Research, is the provider of the SourceForge Development Intelligence application. The company is headquartered in Mountain View, California.

SourceForge, Inc. owns several well-known websites, including ThinkGeek and Slashdot.

1 Early history
2 Initial public offering
3 Recent history
4 Operations
5 Earnings
6 References
7 External links

[edit] Early history

Founded in 1993 as VA Research, the company started as an operation in which Stanford graduate student Larry Augustin, along with partner James Vera (both Vera and Augustin were colleagues of Jerry Yang and David Filo at Stanford,^{[citation needed]} who would go on to found Yahoo!), built and sold personal computer systems pre-installed with the Linux operating system as an alternative to much more expensive Unix workstations available at the time. At the time they started operations, they were one of the first computer vendors to offer Linux as a pre-installed operating system.^{[citation needed]} During the initial years of operation, the business was quite profitable and grew quickly, with over $100 million in sales and a 10% profit margin in 1998^[3] and was the largest vendor of pre-installed Linux computers, having approximately 20% of the Linux hardware market.

In early 1999, VA purchased their top competitor, Linux Hardware Solutions. As part of this merger, VA Research changed their name to VA Linux Systems to capitalize on their Linux products, and began to make plans for an initial public offering (IPO). VA also won a business plan competition that year for the right to operate the linux.com domain, although it was rumored^{[citation needed]} that Microsoft and other bidders (Compaq, Red Hat, HP) had offered more cash but less plan for the domain.

[edit] Initial public offering

VA Software is notable because of its IPO on December 9, 1999. The shares for the IPO were offered at $30, but the traders held back the opening trade until the offers hit $299. LNUX later popped up to $320, and closed their first day of trading at $239.25, a 698% return. However, this high-flying success was short-lived, and within a year the stock was selling at well below the initial offer price. As of 2005, this is still the most "successful" IPO of all time. The stock price reached an intra-day nadir of 54 cents on July 24, 2002. It then soared more than 1000% to an intra-day high of $6.38 on September 11, 2003. As of November 26, 2006, the stock closed at $4.64.^[4]

Many authors of free software were invited to buy shares at the initial price offering as part of a friends and family deal.

Due to the immense difference between the IPO offering price and the opening price, VA Linux did not actually raise much capital in the offering, and the stock price sagged as investors realized that the company's revenue and profitability were not likely to justify the share price. However, on February 3, 2000, the company announced that it was acquiring Andover.net (itself a recent IPO company). This gave them popular online media properties such as Slashdot, Andover News Network, and a variety of online software development resources, as well as a stable of writers such as Rob Malda, Robin Miller, Jack Bryar, Rod Amis, Jon Katz, and "Cowboy Neal." The acquisition was not without controversy in the Linux community. Bryar, in particular had written multiple articles suggesting that most Linux businesses were poorly thought out. He cautioned that the excitement over Linux was little more than another Internet bubble. Nonetheless, this acquisition eventually allowed the company to shift its business model from Linux-based product sales to specialty media and software development support.

[edit] Recent history

The company's original equipment and systems business model began to encounter stiff competition from other hardware vendors offering Linux as a pre-installed operating system (Dell, in particular), and the company began to experience operating losses. Eventually, on June 26, 2001, VA Linux decided that they would leave the systems hardware business and focus on software development.^[5] During the summer of 2001, there was a large staff reduction since all of the hardware focused people were let go as a result of this shift in the core business model.

On December 6, 2001, the company formally changed its name to VA Software in recognition that the majority of their business was now software development and specialty news and information services. However, the company's Japanese subsidiary still goes by the name of "VA Linux Systems Japan K.K." after the parent company changed its name. In January 2002, Sumitomo Corporation became the largest shareholder in VA Linux Systems Japan, and the Japanese subsidiary became independent of VA Software.

The controlled company Andover.net was renamed to Open Source Developers Network, and then Open Source Technology Group. ^[6]

On May 24, 2007, the company changed its name to Sourceforge Inc. and merged with Open Source Technology Group:^[7] therefore, the latter does not exist anymore as a separate entity.

[edit] Operations

SourceForge operates SourceForge.net, Slashdot, Linux.com, IT Managers Journal, NewsForge, and Freshmeat. SourceForge licensed SourceForge Enterprise Edition to enterprise organizations. Thinkgeek — an ecommerce site — is also under the SourceForge banner. VA Software sold Animation Factory to Jupitermedia Corporation on December 27, 2005,^[8] and SourceForge Enterprise Edition to CollabNet on April 24, 2007.^[9] On May 24, 2007, the company announced its name change from VA Software to SourceForge, Inc.^[10]

[edit] Earnings

On February 21, 2006, VA Software reported its first ever profitable quarter.^[11] Net income for the second fiscal quarter stood at $10.5 million, or 17 cents per share, compared to a net loss of $702,000, or a penny a share, in the previous year's second quarter. Excluding one time gains from the sale of Animation Factory, VA's profit that quarter would have been $1.1 million, or 2 cents per share.^[11] VA followed this performance with two more consecutive profitable quarters, earning $1.1 million in 3rd quarter 2006^[12]^{[citation needed]} and $700,000 in fiscal 4th quarter 2006,^{[citation needed]} which ended on July 31. VA ended the fiscal year with $51.9 million of cash, up from $36.6 million the previous year.^{[citation needed]}