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LinuxMall.com and EBIZ to merge. LinuxMall.com and EBIZ have announced that the two companies have signed a letter of intent to merge. The new company, which will retain the LinuxMall.com name, will be positioned as the largest Linux "shopping mall" on the net, with large product lines on [LinuxMall.com] the hardware and software sides both.

Even though LinuxMall.com will end up in control of the new company, it is being structured as an acquisition of LinuxMall.com by EBIZ. Things are being done this way because EBIZ is already a public company. LinuxMall.com had an IPO process in the works, but current market conditions are not all that friendly to Linux IPOs. By joining with EBIZ, LinuxMall.com gets a quick path to a publicly-traded stock and doesn't have to go through the whole, long IPO routine.

The details: there are currently just over 8 million shares of EBIZ outstanding, traded on the over-the-counter market. By the time the deal is done, that number will go up to approximately 24 million. EBIZ has been trading in the $2-3 range since April. If the combined company can get that value up over $4 for at least a month, the stock will qualify for listing on the NASDAQ (where they evidently want the symbol "LINX" - the same one LinuxOne wants). LinuxMall.com management and "affiliates" will have a one-year holding period on their new EBIZ stock, so much of the new stock will not hit the market for some time.

This deal is an important milestone on a very long road for LinuxMall.com, which is truly one of the original Linux companies. It started out as "Work Group Solutions," founded by Mark Bolzern. WGS, back in 1993, was looking for a stable environment for its business, and gave Linux a try. Shortly thereafter, Mr. Bolzern discovered the "Clipper" language, which was then available on SCO systems. He talked with folks at Multisoft, who produced the "Flagship" Clipper compiler, and managed to convince them to do a Linux port; WGS then resold the resulting product. Mr. Bolzern tells us that it was, to the best of his knowledge, the first commercial product ever to run on Linux.

There was just one problem: the Slackware system that almost everybody was using in those days was a hard platform to support products on. Linux was young, and things were changing all the time: file layouts, libraries, etc. In order to have a more stable system, WGS put together a distribution called "LinuxPro"; it was based on Slackware, but was developed and maintained to be more consistent and not break commercial products. To Mr. Bolzern's surprise, LinuxPro quickly began to outsell Flagship. It grew to the point that it won a "Best of Show" award at the 1995 Comdex.

The 1995 Comdex show was also a watershed event in that it was the first to feature a Linux Pavilion. The separate area for Linux was also a result of Mr. Bolzern's work; he pushed for and organized it in the belief that it was best for the fledgling Linux commercial sector to show a unified front and grow the market share of Linux as a whole. Subsequent events have certainly supported this view.

As other early Linux distributors, such as Caldera, emerged, LinuxMall.com slowly withdrew from that market. LinuxPro is actually still available - though in 1995 it changed its base to become perhaps the first commercial distribution to add on to Red Hat. But LinuxMall.com decided to focus on reselling the products of others. It has played a crucial role in providing a market for Linux products, large and small. There is a large and vibrant Linux market now; LinuxMall.com laid much of the foundation that allowed that market to exist. The respect shown in the long-term Linux community can be seen in the makeup of LinuxMall's advisory board: Michael Cowpland, Alan Cox, Gael Duval, Adam Goodman, Jon "maddog" Hall, Miguel de Icaza, Ronny S.L. Ko, Ransom Love, Don Rosenberg, Linus Torvalds, and Ted Ts'o.

Mr. Bolzern fears some will be disappointed that, with this merger, the opportunity to do a directed share program with its IPO has been lost. That may well be, but LinuxMall.com has already done much to bring about the current success of Linux - and it did this many years ago, when there was far less money flying around. Mr. Bolzern also thinks that the merger with EBIZ may provide a better way to reward people: he sees EBIZ stock as being currently heavily undervalued. Nobody can say for sure, but the combined company may prove to be worth substantially more. Says Mark: "I hope instead of a huge bounce, that this approach will bring solid long term growth in a stock worth holding."

PHP 4.0 has been released. The announcementfor this long-awaited release came out on May 22. PHP is perhaps the most common Apache add-on, running on millions of web sites. It is the motor behind no end of dynamic, database-driven sites and the basis of the Midgard application server. [PHP4 logo] So a new PHP release will eventually affect a large portion of the web.

There is actually relatively little in the way of new features with this release - the big changes are mostly hidden under the hood. At the top of the list is the new "Zend" engine, which is said to greatly speed the execution of PHP code. Zend also brings reference counting (leading to better memory utilization), better object support, and even a boolean type. PHP 4.0 also features a new "server abstraction layer" that makes it easier to host PHP on servers other than Apache. The 4.0 release is currently supported on Apache and IIS.

One other nice feature of PHP 4.0 is backward compatibility. It should be possible for most sites to upgrade without having to dig into their scripts and fix things. The change to version 3 was not so easy; it is nice to say that fewer problems await PHP webmasters this time around.

Congratulations are due to the PHP team for this milestone release. See the PHP web site for more information.

Lineo has filed for an IPO. The company seeks to raise on the order of $60 million from the offering. No offering time has been set, of course, but it generally takes about two months from the filing for the stock to actually go out. Thus, one can maybe expect Lineo to go public sometime around mid-July.

LWN has posted an analysis of Lineo's IPO filing as a feature article. These filings always give some interesting insights into how a business works, and Lineo's is no exception. In some ways, Lineo looks less like a Linux company and more like a traditional software company. It plans to make its money on the sale of proprietary software components - in this case its embedded web browser and the "Embedix Software Development Kit." The core of Embedix - Lineo's embedded version of Linux - must remain free, but there will be proprietary add-ons there as well. In any case, Embedix itself receives little play in the IPO filing; it looks like the loss leader which drives the sales of the other products.

Lineo's proprietary model will certainly not endear it to the purists in the free software community. At first reading, Lineo's "GPL statement" seems not to help:

There is often ambiguity regarding the exact meaning of certain clauses or conditions of the GNU General Public License (GPL).

Lineo goes on to state that it does not see a number of types of code - such as kernel or Apache modules - as "derivative works" that are covered under the GPL. Lineo can thus extend the kernel via modules and keep the extensions proprietary.

One may not like that interpretation, but it does agree with what others - and Linus Torvalds in particular - have said. There is probably very little in Lineo's GPL statement with which a lawyer would be able to argue. Lineo intends to push the GPL as far as it can - but no farther. The fact that Lineo has actually thought about the issue and put together a policy statement is probably a good sign.

The timing of this IPO is interesting. The market is being, shall we say, not entirely friendly to Linux stocks in this period. The LWN Linux Stock Index, which came out at 100 in September, 1999, and which peaked over 200 last December, now stands below 60. A number of Linux companies which wanted to go public have not even filed. Linuxcare's IPO died a horrible death. Will Lineo be able to pull it off in this environment?

Not even LWN is foolish enough to try to predict what the market will do. But it seems clear that Lineo has taken a difficult and risky path. Lineo's response to the considerable competition it faces (MontaVista, Red Hat, LynuxWorks, TimeSys, plus a whole crowd of well-established, non-Linux players) has been to grow quickly through acquisitions. After having consumed six companies, Lineo stands at a full 200 employees.

This is not a bad performance for a pre-IPO company. But those six companies sold with the understanding that Lineo's stock would be worth something sometime soon. And keeping all those employees paid is expensive. Both of these factors will certainly push Lineo toward going public sooner rather than later - even if the timing is perhaps not the best.

What happens if this IPO fails? If the market remains grim, a failure is a distinct possibility. Lineo is depending on the IPO cash to keep operating - they say it's enough to keep them going for 15 months. Without that money, Lineo starts to look a lot like Linuxcare: a high burn rate and a shrinking bank account. The company currently has $30 million in the bank, thanks to all the investments it has received. That's a big stash, but 200 employees could burn it up in a hurry. For the sake of Lineo and its stash, one hopes that this gamble (and an IPO is always a gamble) works out.

Inside this week's Linux Weekly News:

  • Security: Standard and Poor's Comstock's Linux-based multiCSP.
  • Kernel: Eric Raymond hacks kbuild.
  • Distributions: The embedded Linux distribution arena heats up.
  • Development: ActiveState endorses Mozilla, another GPL'd software package.
  • Commerce: Scriptics changes name to Ajuba Solutions.
  • Back page: Linux links and letters to the editor
...plus the usual array of reports, updates, and announcements.

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May 25, 2000


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