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Red Hat stock for Linux hackers. Red Hat has sent around a mailing to a selected list of Linux contributors offering them the ability to buy Red Hat stock at the IPO price. The value of this offering is clear - if Red Hat's IPO follows the pattern of many others, the price of the stock will rise greatly immediately once public trading begins. Somebody who is able to buy at the IPO price (normally a very difficult thing to do) can often sell for a tidy profit on the same day. Those who want in for the long term get a nice starting point as well.

Some have complained that Red Hat's mailing constitutes spam, or that it is an attempt to drive up demand for their stock. Neither of these criticisms seems valid. If Red Hat really wants to build demand for their offering, they are much better going after large institutional investors. It seems instead that Red Hat is really trying to do the right thing here - giving Linux hackers a chance to own a piece of the success that they have helped to create.

It has often been asked whether people working on free software will be willing to continue doing so when they see corporations profiting from their work. It thus makes a lot of sense for companies in that position to try to keep the developers happy. Compensating such a large, distributed, and dynamic group is a very hard thing to do. Letting them in at the beginning of an IPO is one relatively easy way to spread a little bit of success around.

It also can not hurt Red Hat if developers have a personal stake in the success of the company. They thus become motivated to help the company continue to prosper. Red Hat may well find that these developers are more responsive to the needs of the company.

Some folks who, like this author, have not received one of these offers are likely to be feeling a little left out. There is probably no way to avoid that problem. The Linux community is too large for anybody to be able to find - much less offer stock purchases to. The only way to avoid this sort of hurt feelings would be to not make the offer to anybody.

There are, of course, no guarantees here. Red Hat's stock could fall through the floor on the IPO day, leaving its developers (and founders) rather poorer. But the odds seem to be against that outcome. Red Hat is doing the right thing by letting some developers in early; we hope it proves lucrative for all who choose to participate.

Dan York from LinuxCare was kind enough to serve as our ad-hoc reporter for Linux at Comdex Canada. Here are his excellent and amusing reports from the events, complete with pictures from Day 2 and Day 3.

  • Day 1, the Linux Pavilion
  • Day 2, "Excuse me, are you in line?"
  • Day 3, "Does it run on Linux?"

Christmas in July. We recently picked up a new Linux-installed system from Penguin Computing and put it through a few paces. Check out our review of the system for our take on Penguin's product. The executive summary: it is a very nice box, but we have some reservations about how they handle the software side of things.

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July 22, 1999


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