The Agenda Setters: VA Linux chief calls for IPO rethink

The companies which triggered the Internet explosion will suffer a devastating impact unless IPO valuations become more realistic.

That's the view of Larry Augustin, CEO of VA Linux, who has had direct experience of the roller-coaster ride of recent market valuations. In December 1999, VA Linux's share price rose 700 per cent on its IPO (initial public offering), only to fall to a tenth of that within months.

As the subject of this week's Agenda Setters programme, Augustin said that while the wild stock fluctuations have not affected his business, the industry must adopt a more sensible policy.

He told silicon.com: "Clearly how we set valuations is something people have to look at because it's been all over the place and I think the fluctuations in the market have really sent the message of exactly that. Some valuations are high, some are low, there's got to be some balance going on."

VA Linux sells hardware and software based on the Linux OS, and stunned the industry with its record-breaking IPO last year. However, since its opening day high on Nasdaq of $320, its share price has plummeted to about $50. His personal fortune, tied to the share price, plunged from almost $2bn to approximately $350m.

But Augustin claims not to be worried by the company's devaluation. He said: "Fundamentally, we're now stronger than we were at IPO, and the correction in the market has actually done us good."

Augustin added that he welcomes the developments in the Microsoft anti-trust trial, and said the splitting of the software giant into operating systems and applications divisions will herald the arrival of Linux on the desktop.

You can see the full Agenda Setters interview on Silicon's Server Channel (http://www.silicon.com/a37543 )

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'Industry experts slam "mad" VA Linux valuation' http://www.silicon.com/3