VA Linux to sell proprietary software
VA Linux Systems, once one of the flagships of the open-source software world, will rely on sales of proprietary software in the future, the company said today as it reported a $290 million loss for the most recent quarter. VA created an open-source program called SourceForge used to house open-source collaborative programming projects. The site was an adjunct to its now-abandoned Linux computer sales strategy.
Now the Fremont, Calif., company will sell closed-source enhancements to companies wanting to use the collaborative programming software, called SourceForge Enterprise Edition, Chief Executive Larry Augustin said in an interview Thursday.
While some companies such as Red Hat have stayed with the open-source philosophy, under which software may be changed, modified or redistributed by anyone, others such as ArsDigita have reversed that direction to focus instead on more traditional sales of proprietary software modules. And Covalent Technologies always has sold proprietary additions to the open-source Apache software.
The mixture of open and proprietary software "is a model we saw a lot of people going to," Augustin said. With VA still backing an open-source core to SourceForge, "We felt we could still be true to the open-source roots and at the same time go to a business model that was proven," he said.
And VA needs a proven business model. It reported revenue of $16 million Thursday; most of its loss was from its abandonment of Linux computer sales in favor of software and services. The company said $267 million of the loss was from non-cash charges for goodwill, intangible assets and restructuring charges because of VA's departure from the computer business.
The loss for the fiscal fourth quarter of 2001, which ended July 28, came to $5.58 per share. The company expects its new business plan to produce revenue of $3 million to $4 million in the current quarter, with a net loss from operations of $10 million to $13 million.
The $16 million in revenue was a steep decline from the $51 million from the year-ago quarter, when VA's dependence on Internet customers hadn't yet become a problem.
Analysts surveyed by First Call, who factor out most of the charges that led to VA's deep loss, expected a loss of 32 cents per share. --Stephen Shankland, Special to ZDNet News