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VA Linux at 0.97/share, Danger of being delisted

By 2400n81 in News
Wed Sep 19, 2001 at 05:08:48 PM EST
Tags: etc (all tags)

VA Linux's stock has been hovering around 1.00/share, which is the limit for NASDAQ delisting. Currently, it is at .97/share. While our attention has been on the WTC terrorism, it is worth mentioning that the end of Slashdot, Sourceforge, Thinkgeek, and VA itself is here now... though Slashdot will probably survive in some form.

As is well-known, being delisted from the NASDAQ means death to a company. VA Linux has an exceptional amount of venture capital obligation which it never could recover from, even being on public markets.

Once it is taken off the public market, there is ultimately no way it could survive. It barely has a profit model since it removed its marginally profitable server-building operation in favor of consulting and services.

However, if Joe Q. Public has a small consulting business and can barely make a profit on the "Linux business" in these times, how is VA supposed to do so? Or, could VA buck the trendy fate of the now-bankrupt "Linux service businesses"?

What saddens me is that it will mean the end of Slashdot, Sourceforge, ThinkGeek, and a few other neat things that I've come to enjoy.

I think that Slashdot would probably continue on, though it will be interesting to see Malda & Co.'s priorities shift when they have to go out and deal with the shitty tech job market like the rest of us.. Reality check time, guys! Welcome to the club!

The delisting of VA Linux is somewhat petty in comparison to what has happened recently; we all knew it was going to happen and it sort of makes me sad.... but I know someone who is going to be really happy.


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Related Links
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VA Linux at 0.97/share, Danger of being delisted | 14 comments (13 topical, 1 editorial, 0 hidden)
Why does being de-listed mean death? (3.83 / 6) (#1)
by TheophileEscargot on Wed Sep 19, 2001 at 09:31:03 AM EST

We all knew it was in trouble, and I can see that being de-listed is a blow, but why does it mean death?
Support the nascent Mad Open Science movement... when we talk about "hundreds of eyeballs," we really mean it. Lagged2Death
Yes, delisting is death (4.88 / 9) (#2)
by mcherm on Wed Sep 19, 2001 at 11:03:17 AM EST

I wouldn't invest in a company whose stock wasn't liquid (except perhaps if I worked there). When I buy a stock, I'm essentially buying part ownership in a business. If I expect the business to grow, then I can invest, and later sell my shares to someone after the business grows. But if I weren't allowed to sell the shares, then I'd have no way to back out of the business later, and I'd only risk doing that with my money if I were running the business myself.

Well, not being ABLE to sell your shares is almost as bad as not being allowed to, and you're not able to sell them if you can't find a buyer. That's what markets (NASDAQ) are for... they bring buyers and sellers together. But they won't list a stock which they believe may be simply an attempt to defraud investors, and one of MANY rules that they use to protect against this is a minimum $1.00 stock price.

So... no listing means no buyers means no value means (essentially) no company.

Solutions: Raise price, reverse split (a "join"?), get exception from NASDAQ (possible, but difficult). Maybe other solutions?

-- Michael Chermside
[ Parent ]

but if there's growth? (3.50 / 2) (#11)
by ethereal on Fri Sep 21, 2001 at 01:04:30 PM EST

But, if you really think the company could grow, then theoretically it will eventually be re-listed, and your shares would regain their liquidity.

Not that I necessarily see VA Linux doing this, I'm just pointing out that a non-liquid investment doesn't have to stay that way.


Stand up for your right to not believe: Americans United for Separation of Church and State
[ Parent ]

And of course... (3.90 / 10) (#3)
by fluffy grue on Wed Sep 19, 2001 at 12:16:30 PM EST

Remember that K5's banner ads are delegated/paid/etc. by OSDN, which is run by VA. Looks like Rusty's gonna be pushing for subscriptions a bit harder soon...
"Is not a quine" is not a quine.
I have a master's degree in science!

[ Hug Your Trikuare ]

Well, he SHOULD get more subscriptions! (3.75 / 8) (#6)
by mcherm on Wed Sep 19, 2001 at 01:57:57 PM EST

I think it's SHAMEFUL how few subscribers there are! I subscribed 2 days after the box appeared. At the moment I write this there are only *69* subscribers!!! That's pitiful! I personally thought that the price was a bit high... until I discovered that hardly anyone subscribes!! Come on folks... even if you think it's a bit pricy, contribute anyhow, then let your subscription lapse after a while. But show some support for the good folks here at K5. How much bandwidth do you think $345 per month (so far) buys?

-- Michael Chermside
[ Parent ]
Don't be too upset :-) (4.71 / 14) (#8)
by rusty on Wed Sep 19, 2001 at 02:39:52 PM EST

There are actually more subscribers than I expected. Right now, subscription fees don't contribute all that much to the total revenue of K5. It's priced higher than most people are willing to pay, and you don't get much for it. Subscribing is pretty symbolic right now, really. Plus, we don't actually have to pay for bandwidth, VHosting trades our hosting for that ad on the right.

Now, if the OSDN ad income went away, we'd have some changes in the subscription policy. It'd probably be cheaper, for one, and I'd try to work up some nifty incentives (like maybe a [yourname]@kuro5hin.org email redirector). It would obviously become a lot more important to us. I also have some other schemes up my sleeve, so K5 will be ok one way or the other.

Thanks for your enthusiastic support though. :-)

Not the real rusty
[ Parent ]

Well (2.50 / 8) (#9)
by delmoi on Wed Sep 19, 2001 at 06:30:19 PM EST

If a k5 subscription was $5/year, I might consider subscribing. But it isn't. So I won't.
"'argumentation' is not a word, idiot." -- thelizman
[ Parent ]
Value of a K5 subscription? (4.20 / 5) (#13)
by John Miles on Fri Sep 21, 2001 at 09:45:54 PM EST

If a k5 subscription was $5/year, I might consider subscribing. But it isn't. So I won't.


Delmoi, as far as I can tell, you post comments to just about every story on K5. In fact, a quick check indicates that you've posted 1,677 comments to K5 since February of last year. That comes to almost 100 comments a month, or three per day.

Now, let's say you spend three minutes on each comment you post, counting the time it takes you to read the associated story and any comments you're replying to. Three minutes per comment seems like a reasonable lower bound for someone like yourself who's actively participating in an online community (as opposed to posting goatse.cx trolls or something).

Does that sound about right to you?

If so, it appears that you're willing to spend at least five hours a month of your time on K5, but not five dollars a month.

So either your time is worth something on the order of $1/hour, or you tend to value a trivial amount of money more than a significant amount of your time.

Or maybe you just like looking at ads all day?

For so long as men do as they are told, there will be war.
[ Parent ]

well if he took fucking credit cards (3.40 / 5) (#10)
by alprazolam on Thu Sep 20, 2001 at 05:25:19 PM EST

or checks or some other way than stupid pay pal of subscribing, maybe some people would

[ Parent ]
VA is a smaller concern... (4.30 / 13) (#4)
by michaela on Wed Sep 19, 2001 at 12:53:23 PM EST

even though they are a Linux oriented company which making them a "local favorite."

What has me more worried is that Exodus Communications has been trading at $0.34/share the last few days and is also in danger of being delisted. Exodus is a large hosting/colocation provider whose collapse would cause reverberations that reach much further than those of VA Linux.
That is all

Delisting, etc. (4.90 / 10) (#7)
by babylago on Wed Sep 19, 2001 at 02:09:51 PM EST

I've worked with and for a few public companies, one of which was recently delisted from NASDAQ.

Delisting lowers the liquidity of the stock. It doesn't directly kill the company, but by making it far less convenient to buy and sell, the stock becomes less liquid (which is a measurement of how easy it is to turn it into cash) and investors are far more likely to sell rather than buy, just to get out of their positions. The stock can continue to trade Over-The-Counter (OTC:BB) or in the pink sheets, or on alternate exchanges if it meets their requirements.

There are many options. As some have noted, a reverse split is possible. However, this is not generally a good move with the shareholders, as you reduce the number of their held shares by the factor of the reverse split. For example, let's say you had 100 shares of VA. A 1-for-10 reverse split could theoretically take the stock price from $0.97 to $9.70, but in turn you would now only have 10 shares. If VA was heavy in cash and felt like propping up the stock, they could buy back some of the outstanding shares (particularly given NASDAQ's recent lifting of certain rules of behavior), thereby reducing the total float and placing some buy activity on the board. They could also find some other small company that is listed on NASDAQ and merge/reverse merge with them to convert the VA shares into liquid shares of the new company, and hope that they don't tank the new stock as well. Or they could just get bought by someone like IBM who has a strong stock price and convert the VA shares into the liquid new company shares.

Delisting doesn't necessarily mean death, but it typically means that unless your company has lots of cash sitting around, then you're in for some interesting changes in organization, personnel, and perhaps ownership. VA's strongest point, in my opinion, is the intellectual capital of its developers. Whether someone will buy VA to get those people, or simply let VA die and then hire them, is an open question.

[ Blog | Hunnh ]

Ah, the cheap thrill of sensationalism... (4.12 / 8) (#12)
by quartz on Fri Sep 21, 2001 at 02:57:06 PM EST

the end of Slashdot, Sourceforge, Thinkgeek, and VA itself is here now...

Wow, this story actually made it to the section page (the news section no less). I thought the k5 crowd was far above the vulgar temptation for sensationalism, but it seems I was wrong.

You know, what never ceases to amaze me about people who spread this kind of "news" (and those who revel in it) is:

  • you'll never, ever, see them simply stating facts, as someone who pretends to report news should be doing. They can't just say "VA stock is about to be delisted" and end the sentence there -- noooo, that's only information, and what fun is news when it's just information? For some mysterious reason, they absolutely positively have to throw in the "this is the end of the world as we know it" tidbit. I can understand this behaviour in tabloid editors, after all that's how they earn their living, but here?
  • the logic weirdness they cheerfully employ in order to reach their oversimplified but highly sensational conclusions. I mean, it's not like k5 or Slashdot have ever existed outside OSDN, or like Rusty and Taco have started their sites as something other than VA employees, or like they have a personal involvement in their sites other than the paycheck from VA. Nooo. Rusty and Taco are just in it for the big heaps of VC money, and k5 and Slashdot are really no different than your average boo.com -- they'll instantly cease to exist on the Net as something other than a fuckedcompany.com record the moment their staff is done burning through the pile of cash from the IPO.
  • they just can't resist slipping a cheap shot somewhere in the story, like this one: it will be interesting to see Malda & Co.'s priorities shift when they have to go out and deal with the shitty tech job market like the rest of us. Call me a cynic, but that reeks of envy (the particularly disgusting variety) from several miles away.

Now here's my question: is k5 turning into adequacy.org (yech), or is this story just an accident, and things will be back to normal as soon its author goes back under whatever rock he crawled out from, along with the 20 fake accounts he used to moderate this mockery of a story up to the section page?

Fuck 'em if they can't take a joke, and fuck 'em even if they can.
a service to readers (5.00 / 2) (#14)
by streetlawyer on Mon Sep 24, 2001 at 05:56:47 AM EST

I'd just like to point out that adequacy.org, the site mentioned in the comment above, can be reached by typing "www.adequacy.org" into the address bar of most modern browsers, or by following a hyperlink to adequacy.org, like the ones in this post, which also helpfully mark themselves out as links to adequacy.org, by using the words "adequacy.org".

In case you had trouble clicking on the links to adequacy.org, here's another one, on a line of its own and in bold.


Just because things have been nonergodic so far, doesn't mean that they'll be nonergodic forever
[ Parent ]

VA Linux at 0.97/share, Danger of being delisted | 14 comments (13 topical, 1 editorial, 0 hidden)
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