VA Linux Systems’ stock price fell nearly 40 percent
Monday following an announcement regarding disappointing first-quarter
revenues.
Although official results will not be revealed till November 16, the
company stated that first-quarter revenue is expected to grow by 10 percent
from the previous fiscal quarter and 275 percent from the same quarter last
year.
Monday’s numbers are pale in comparison to fiscal fourth-quarter results,
which showed record revenues of $50.7 million, an increase of 547 percent
compared to the same period of fiscal 1999 and an increase of 46 percent
compared to the prior fiscal quarter.
For the full fiscal year 2000, VA Linux revenues totaled $120.3 million,
an increase of 579 percent over fiscal year 1999 revenues of $17.7 million.
The provider of Linux and open-source solutions attributed the revenue
loss to lower-than-expected sales growth from new customers in the dot-com
sector as well as increased spending on higher revenue expectations.
“Although repeat business with our existing customers remained strong
during the first fiscal quarter, the number of new customer opportunities
from venture-funded dot-coms declined faster than anticipated, said Larry M.
Augustin, CEO. “Going forward, we expect to benefit from out strategy of
pursuing a broader account base, including business from large corporate and
enterprise accounts.
“These customers require longer sales cycles, and we did not receive a
significant contribution to revenue from that sector in the fiscal first
quarter,” he said.
Augustin expects the company’s 2001 revenue to be about 2.25 times fiscal
2000 revenue. “This represents a reduction from the previous guidance of 2.5
times fiscal 2000 revenue,” he said. “The company still anticipates becoming
profitable, excluding non-cash charges, no later than the end of 2001.”
Today’s high for the Linux stock was $18.75. The company has a 52-week
high price of $320 and a 52-week low of $17.06.
Since its founding in 1993, VA Linux has grown from 15 employees to more
than 400.
