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VA Linux sets lower sales targets

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DQW Bureau
New Update

SV News Service


Sunnyvale

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A Linux Systems, which has made Wall Street history with the biggest one-day increase in stock value, has seen its shares plunge 93 percent. On Monday, the company's shares lost 42 percent of their remaining value, after the Sunnyvale maker of Linux servers and workstations said its fiscal first-quarter loss

was wider than forecast and sales were lower than expected due to the crunch in the dot com industry.

VA Linux shares fell $ 12.63 to just $ 17.38, a $ 664.9 million drop in the company's market value. VA Linux also lowered its fiscal 2001 sales forecast by 10 percent to $ 270.7 million from $ 300.8 million.

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The company blames the turbulent times in the Internet industry for most of its problems. Internet companies have been relying heavily on Linux to run their networks of Internet servers. But dot com companies have been going out

of business at about the same rate they appeared on the scene in 1998 and 1999. Most are unable to attract the level of advertising and sales commission support needed to stay in business.

"All of our larger customers are in the Internet market,'' said Patrick Fossenier, Spokesman, VA Linux, adding that the company is trying to broaden product appeal in other sectors.

Analysts said that VA Linux is also suffering from the increased competition from IBM, Compaq and Dell, all of which are now pushing their Linux-based servers as a way to compete more effectively with Sun Microsystems.

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