In a yet another sign of an ailing IPO market, Linux software company
lowered the expected price range of its initial public offering Thursday for the second time.
San Diego-based Lindows reduced the price range of its IPO to $5 to $7 a share, from a previous range set Friday of $7 to $9. That already was reduced from the initial range of $9 to $11. The company still plans to sell 4.4 million shares, to raise between $22 million and $30.8 million.
Based on the midpoint of the proposed ranges, Lindows has slashed the amount it plans to raise by 40%. The company's CEO, Michael Robertson, whose previous venture MP3.com was embroiled in a major legal battle against record labels, has indicated an interest in buying up to $5 million worth of Lindows' stock. In addition, the underwriters -- Roth Capital Partners, JMP Securities, Merriman Curhan Ford & Co. and Kaufman Bros. -- have the right to purchase up to 660,000 additional shares.
The stock may start trading as soon as Friday on the
under the ticker symbol LNE. The company abandoned earlier plans to go public via a Dutch auction, a controversial method being used by
Lindows' price-range reduction comes amid a rash of discounting by companies planning to go public -- a symptom of the slackening IPO market. In addition, many companies are just bailing out altogether. Last week, seven companies withdrew or postponed their IPOs -- the highest weekly number since April 2001, according to Thomson Financial.
first filed to go public in April, perhaps hoping to capitalize on the buzz surrounding the Linux open-source software and fellow Linux vendor
. Red Hat, one of the few other publicly traded Linux vendors, has generated controversy because of its previously
stratospheric valuation, but it's fallen amid the recent departure of the company's CFO and subsequent accounting disclosures.
Since its first filing, however, the legal front has improved for Lindows. In July, the company reached an
to change its name to Linspire by Sept. 14. That settlement ended 2 1/2 years of litigation that began when Microsoft sued Lindows, complaining its name was too similar to its flagship Windows product. Microsoft agreed to pay Lindows $20 million -- a drop in the bucket for the world's largest software maker -- in exchange for changing its name.
Lindows also became embroiled in a lawsuit with its insurance carrier over coverage of legal fees, which is still winding its way through court.
But Lindows still faces stiff competition from Microsoft, whose Windows franchise dominates the desktop market.
And in a note that doesn't bode well for the company on the financial front, 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."
For the quarter ending March 31, the company generated $1 million in revenue, more than three times the $311,673 in revenue posted a year earlier. But the company's net loss in the quarter grew to $1.6 million from $1.4 million a year earlier.