As the hoopla over Google's
IPO recalls the go-go days, at least one smaller, lesser-known company is hoping for a piggyback ride. Lindows, which sells Linux for the desktop, recently filed to raise $57.5 million. In addition to taking advantage of the IPO frenzy over Google, Lindows is also poised to capitalize on enthusiasm surrounding all things Linux. A successful IPO would make the San Diego, Calif.-based firm a member of a small cadre of public companies that sell the much-ballyhooed open-source operating system. But don't expect another Red Hat ( RHAT), the Linux vendor whose market cap has swelled to more than $4 billion. While Lindows' product gets strong reviews, its prospectus is littered with red flags. The 3-year-old Lindows also faces daunting competition -- and legal challenges -- from Microsoft ( MSFT), among other tech heavyweights. "This is a throwback to the bubble era," John Fitzgibbon, editor of the newsletter IPO Weekly at www.123jump.com, said of a potential Lindow's offering. Indeed, Lindows' $4.1 million loss on a minuscule $2 million in revenue in 2003 and $11.9 million accumulated deficit inevitably conjure up memories of dot-com days. (By comparison, Red Hat reported a loss of $91,000 on $10.8 million in revenue in the fiscal year before its 1999 IPO.) Although its outlook may reflect post- Enron skittishness, Lindows' auditor, PricewaterhouseCoopers, said the company's recurring losses, negative working capital and accumulated deficit "raise substantial doubt about the company's ability to continue as a going concern." Bubble-era comparisons notwithstanding, potential Lindows investors shouldn't expect the stratospheric one-day pop that was common during that more exuberant time. The fact that Lindows will go public via W.R. Hambrecht's OpenIPO Dutch auction virtually guarantees no such jump. That's because investors submit bids before the stock trades, which are then used to determine the actual public offering price. Consequently, any potential run-up is already reflected in the stock's opening price. "Don't expect a moonshot," Fitzgibbon said.