Client Server NEWS 348.3 NewsFlash
The Very Independent Observer of Microsoft, Windows 2000/NT and Other Phenomena
May 3, 2000, 2000 - New York & London
Linuxcare Cuts Staff
By Maureen O'Gara
Wednesday, May 3, 2000 - Linuxcare today canned a reported 35% of its
staff, roughly 80 people. Linuxcare said as a private company that it
wouldn't talk numbers but admitted that it is "restructuring our
workforce and reducing headcount."
The terminations came 48 hours after it officially pulled the plug on
its IPO, setting off a new round of speculation that it is running out
of money and may be putting itself on the block. Given recent events -
the clouded departure of its CEO Fernand Sarrat followed two weeks
later by its CIO Doug Nassaur - Linuxcare may have forfeit other
financing avenues besides the public trough and that now is off-limits
too.
The company has been maintaining the fiction that it was only
postponing going public but on Monday it finally sent the papers to
the SEC withdrawing the offering. After citing general market
conditions, it told the agency that it had determined that "it would
not be in the company's best interests to proceed at this time."
Before Linuxcare lost both Sarrat and Nassaur, it had planned to sell
4.5 million shares for $13-$15 and raise $56.6 million. The money was
supposed to cover operating losses, working capital and the expansion
of its pricey knowledge base.
Ten days ago Linuxcare chairman Ted Schlein, who is also a partner in
Linuxcare's key backer Kleiner Perkins, reportedly circulated an
internal e-mail denying that the company was running out of money, an
action that immediately set other people to wetting their pencils and
working that maybe Linuxcare has only $15 million left, enough to get
it through another three months, give or take, figuring a burnrate of
$5 million a month. Linuxcare raised a $32.5 million second round in
December and much of it is believed to have paid for Sorcerer, its
knowledge base. Schlein's memo was sent out before he reportedly
traveled to North Carolina to visit Red Hat, a rival that sources say
once made a pass at Linuxcare.
Linuxcare is believed to have been overstaffed but has also been
suffering from attrition lately due to the change in its fortunes. The
rumor mill has suggested that 20%-25% of its sales force have been
looking for new jobs. A few weeks ago it was said to have had 290
people on board.
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Catch up on all the e-commerce news: http://www.onlinereporter.com
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