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Mandrake going to take a Chapter11?


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"There is no money in Linux. Not yet."

 

I think IBM, RedHat and SuSE would disagree... but I would partially agree, there is no money yet in a desktop Linux distro, the area where I think ML has been targetting its OS. 2003 or 2004 could be that year though, although a lot of people seem to think that too and all sorts of new "simpler" Linux distro's are beiny released (Ark, Yopper, Lycoris, Xandros, Lindows ...etc.).

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Here are my contributions to the cause:

 

From Mandrake site (http://www.mandrakelinux.com/en/future.php3)

 

Since April 2001, we have worked hard to converge quickly toward profitability by reducing expenses & increasing income. This has resulted in notable success as shown by the current financial results and positive trends. Reaching the "break-even" point is now planned for the next release of Mandrake Linux in the spring of 2003. Reaching the break-even point was initially planned to occur sooner *if* we generated enough financial resources (e.g. an increase of capital) to cut all of our expensive external contracts (these contracts had huge financial break-penalties).

 

The company is now very close to reaching break-even. But as a result of this major restructuring, we need to restore our capital finances (e.g. we need cash) to meet our supplier's engagements, and to match expenses needed to reach break-even. The "Club call" last March helped greatly, but unfortunately was not enough.

 

Our current cash needs are approximately 4ME ($4M USD). This level of cash infusion would resolve outstanding debts, cover the expenses needed to become profitable, plus secure an extra amount to satisfy the needs of future growth.

 

In order to solve this cash issue, MandrakeSoft has been conducting a Warrant operation since May 28th, 2002. This operation offers an extremely convenient way for current shareholders to purchase shares at a low price (2.1E/$2.1).

 

It should be noted that before the launch of this operation, MandrakeSoft already had a commitment from a large investor for $4M. This fund expected to receive its funding before July 2002, but has been postponed.

 

So, the issues are:

 

 

The warrant operation has been slower than expected due to potential shareholders being wary of the volatility of the current financial markets

The investor's fund has experienced delays in receiving its funding. We've just been informed that it still will not receive funding in the short term so we cannot rely on him for the current funding

We are also in discussion with several interested investors but those things takes time

Additionally, we have yet another commitment for about 30% of a 4ME investment round, but to close this round we must find at least a 2ME ($2M USD) complement.

 

As a result we have a big short-term cash issue.

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Hate to break this to you, but the French version of the law seems almost exactly like Chapter 11 Bankruptcy to me...

 

It has a stay provision, a liquidation provision if the plan doesn't work, etc.

 

It may have another wrapper but it still smacks of bankruptcy. That said, bankruptcy is often used as a litigation tactic more-so than a tactic for going out of business. In fact, as a corporation, it's easier just to go out of business and file nothing than to file for bankruptcy protection. A bankruptcy filing usually means a company is trying to salvage something. In this case it seems that Mandrake's tactic is to shed these lousy business deals and come out with its Linux distribution business intact. Sounds like a good plan to me. If it works, we'll all benefit from a more sound Mandrake distribution, complete with server and corporate versions of their product and service packages...

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If it were only true that their investors were dot.coms. Unfortunately, they include AXA, one of the largest world-wide insurance companies, the Lazzard Bank, and Vivendi-MCA-Universal (as in movie studios and record companies and which is already up to its own ass in alligators). Look up Gael Duval in Google Advanced for some interesting bits and pieces of Mandraksoft's history.

 

Counterspy

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