Linux software vendor
indefinitely postponed its IPO Thursday after lowering its proposed price range twice in the past week, according to underwriter Roth Capital Partners.
San Diego-based Lindows becomes the latest in a string of companies to postpone or withdraw its IPO in recent days amid a dive in the stock market. At least two companies -- The Active Network and MatchNet -- withdrew their IPOs Thursday, citing unfavorable market conditions, according to Renaissance Capital's IPOhome.com site.
All told, seven companies have withdrawn or postponed their IPOs so far this week, according to Renaissance Capital. That was the same level as last week, which was the highest weekly number since April 2001, according to Thomson Financial.
The postponement by Lindows, whose IPO some industry observers said harkened back to
the go-go dot-com days, came after the company reduced the price range on its IPO earlier in the day to $5 to $7 a share, from a previous range set Friday of $7 to $9. That range Friday was reduced from an initial range of $9 to $11.
Lindows, which had planned
to sell 4.4 million shares, gave its underwriters -- Roth, JMP Securities, Merriman Curhan Ford & Co. and Kaufman Bros. -- the right to purchase up to 660,000 additional shares. In addition, Lindows CEO Michael Robertson, whose previous venture MP3.com was embroiled in a major legal battle against record labels, had indicated an interest in buying up to $5 million worth of Lindows' stock.
Initially, Lindows planned to use part of the proceeds from its IPO to repay a $10.4 million loan from Robertson. But now the company is planning to use funds from a settlement with
to pay off Robertson's loan.
However, since Lindows first filed to go public in April, the stock market -- and particularly tech -- has taken a painful turn south, and investors have been increasingly skeptical of IPO-bound companies, such as Lindows, which have yet to turn a profit. 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 Lindows' net loss in the quarter grew to $1.6 million from $1.4 million a year earlier.
The company had $5.2 million in cash on its balance sheet on March 31. Lindows estimated that either the proceeds from its Microsoft settlement or the IPO would be sufficient to fund its operations for at least two more years.
In July, Lindows reached an
agreement with Microsoft 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.