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Mandrakesoft Emerges From Bankruptcy

Linux distributor Mandrakesoft's bid to exit bankruptcy has been approved by the French Commerce Court.

The company filed for "redressement judiciaire"--the French equivalent of Chapter 11 protection--in January 2003 after failing to turn a profit since 1999. Mandrakesoft rebounded last fall with its first quarterly profits in nearly four years. During the period from October through December 2003, the company earned a profit of 270,000 eu ($329,000) on revenues of 1.42 million eu ( $1.73 million).

Company officials cited a renewed focus on the company's core Linux business, cost-cutting, and sales of high-margin products as the reasons for the turnaround.

A bi-continental operation, Mandrakesoft has offices in Paris and in Altadena, Calif. Its stock is traded on France's Euronext Marchi Libre stock exchange as well as in the domestic over-the-counter market.

Moving forward, Mandrakesoft plans to repay outstanding creditor debt pegged at approximately $5 million over the course of nine years. The money, however, won't come out of the companies coffers but rather will be tied to the revenues Mandrakesoft pulls in annually.

Mandrakesoft has nursed itself back to health by relying on a two-fold strategy for distributing its Linux source code software, which it offers under the General Public License (GPL). While offering free downloads via its site, the company earns hard cash from retail versions sold through resellers and its own online store.

Last year, Mandrakesoft snared a major deal on the desktop. The company signed an agreement with Hewlett-Packard to put its Mandrake 9.1 OS on HP machines targeted at small- to medium-sized businesses. HP's business desktop lineup with Mandrakesoft has subsequently expanded to include installation in HP's Compaq, Brio, E-PC and Vectra product families.

Looking ahead, the timing on the bankruptcy exit appears fortuitious. In May, Mandrakesoft plans to release Mandrakelinux 10.0 Official, the retail version of its latest operating system iteration. A free download of the beta version, called the Community edition, has been available since January through the company's revamped distribution site.