Updated from 1:55 p.m. EST

Linux software developer

Caldera Systems

(CALD)

jumped 110% in its debut Tuesday, but its gains were somewhat shy of the extraordinary instant returns of its Linux predecessors.

The company and lead underwriter

Robertson Stephens

raised $70 million from the sale of 5 million shares at the price of $14. Though institutional demand bumped up the initial offering price from the $7-$9 range, investors were not as hungry for the issue as they had been for competitors

Andover.Net

(ANDN)

,

Red Hat

(RHAT)

and

VA Linux

(LNUX)

. VA Linux became the top one-day gainer, soaring about 733% on its first day, Andover.Net and Red Hat more than tripled.

Caldera's stock surged 15 7/16 to close at 29 7/16 on Tuesday.

Investors have cooled to the idea of open source companies and the stocks have fallen sharply. Red Hat is the only one that is still trading higher than its first-day gains. VA Linux and Andover.Net are worth less than half than their first-day closing prices.

Caldera Systems, based in Orem, Utah, makes software and servers from Linux open source code and provides educational training for its clients.

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Caldera's major customers include AST Computers,

Cendant

(CD)

,

First International Computers

,

IBM

(IBM) - Get Report

,

Ingram Micro

(IM)

and

MediaGold

.

Since Linus Torvalds, a Finnish student, developed the open source code that is continuously updated by a loose contingency of developers around the world, entrepreneurs have sought a way to turn free code into free cash. Linux has become more widespread as companies are embracing its cheaper cost and its versatility as a code that can be modified to fit any operation. The Linux community has also become insistent upon keeping applications with Linux code freely available to the public for further modification.

Under the open source model, Caldera runs into the same problems as its peers: no profit from sales of the code and the inability to offer warranties and indemnities on products and services.

In addition, Caldera may draw criticism from the open source developers it depends upon because it sells products based on proprietary technology.

The company's filing with

Securities and Exchange Commission

notes that there are no profitable businesses based on open source code. Caldera will scuttle the philanthropy behind open source in trying to turn a profit in licensing what has been free up to this point.

Critics of the company, in chat rooms and elsewhere online, argue that Caldera's business model, if successful, "would fragment the Linux community, resulting in a less cohesive and cooperative development process," according to the SEC filing. This reaction, if widely shared by customers and developers, could harm the company's reputation and affect revenues, according to the filing.

Caldera's revenues jumped 187%, to $3.05 million in 1999 compared with $1.06 million in 1998.