Red Hot Local Company Tips Its Hat After Big Day on Wall Street
Posted August 10, 1999 7:00 a.m. EDT
RESEARCH TRIANGLE PARK — There are some new, wealthy entrepreneurs in the Triangle -- on paper anyway. The long-awaited initial public stock offering forRed Hat Softwarehit Wall Street Wednesday.
It was indeed a red letter day for the people in the red fedoras. If all the outstanding stock had sold for Wednesday's closing price, Red Hat would be worth $3.4 billion.
The company had hoped to raise $83 million; however, the stock was popular, very popular and the value of the stock sold was more than $300 million -- pretty good for a young, home-grown company.
The excitement surrounding Red Hat's move to the market was hidden behind closed doors. The company's 100-plus employees test, package and sell Linux software; a free operating system touted as a strong competitor ofMicrosoft.
Red Hat stock opened at $46 a share, more than triple the expected $14 offering price. The strong showing on the NASDAQ could mean a lot to the Triangle.
"Here's a company that is home-grown and yes, you can build a significant company here," says Mitch Mumma, technology general partner ofIntersouth Partners. "The other thing it does, it creates a lot of wealth."
Rob Napier, an information technology worker, hopes to make some money after getting in on Wednesday's initial public offering.
"We're very excited that the corporate world and the business world has gotten so interested in what engineers have been interested in now for a long time," says Napier.
Many Red Hat employees have local roots, now they are putting the Triangle on the map.
"It's good that the people that we train here at the schools and the people that we attract have real jobs and contribute to the economy in North Carolina," says Paul Jones withUNC-Chapel Hill's MetaLab.
Red Hat is not a "dot.com" Internet company. It hopes to make big money selling and servicing its Linux products. Mumma, a venture capitalist, says entrepreneurial experience is in Red Hat's favor.
"There has been a great management team built there as they have been in a lot of other venture backed companies," he said. "And their people will go on, as we've seen, and the people that are in that company are recycled, what we call recycled entrepreneurs."
Not everyone is happy with Wednesday's IPO. Scores of people who were offered shares throughE*Trade Securities, one of the underwriters, claim they could not get in on the deal. Many of those people contributed in some way to the development of the open code Linux operating system.