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VA Linux logs large loss
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August 23, 2001: 6:10 p.m. ET
Company's loss widens as it transitions out of hardware sales
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NEW YORK (CNNfn) - VA Linux Systems, which three months ago said it is exiting the hardware business to focus solely on software and services, logged a wide fiscal fourth-quarter loss Thursday on revenue that fell more than 68 percent from the same period last year.
After the close of trading, VA Linux, which set an IPO record when it went public in late 1999, said it lost $290 million, or $5.58 per share, compared with a loss of $47.5 million and $1.15 per share in the year-ago quarter.
At $16.0 million, VA Linux's fourth-quarter revenue fell 69 percent from $50.7 million during the same quarter last year.
The company, which originally had sold Linux-based hardware, software and services aiming specifically at dot.coms, has retrenched recently, announcing three months ago that it will exit the hardware business and focus specifically on selling software and support services that help large corporations develop specialized software more efficiently.
Linux is an "open-source" operating system. That means the underlying code that makes it work is available for anyone to view and modify, as long as they share their modifications with the rest of the Linux community. It's widely available for free on the Internet, but several companies have emerged that offer for sale their own versions of the software, as well as attendant support and services.
VA Linux's decision to exit the hardware business was prompted in large part to avoid going head-to-head with larger, deep-pocketed companies such as IBM and Hewlett-Packard, which recently have thrown their weight behind Linux.
The company, which cut 35 percent of its workforce after it announced its exit from the hardware business, said non-cash charges in the fourth quarter totaled $267 million, including a restructuring charge of $69.9 million.
Looking ahead, the company said it expects revenue in the current quarter to range between $3 million and $4 million, with a net loss from operations of $10 million to $13 million. It did not provide a per-share operating loss-estimate.
Shares of VA Linux (LNUX: down $0.13 to $1.73, Research, Estimates) fell 13 cents to $1.73 on Nasdaq ahead of the earnings news. They fell another 8 cents to $1.65 in extended-hours trade. 
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