Why the markets still don't trust Linux

Linux has only recently begun to regain credibility in the financial markets since its speculative debut. However, its licensing model, hefty competition, and lack of maturity still worry investors. Companies such as Red Hat, long past its 1999 speculative highs, are slowly gaining ground while other Linux companies, such as Linspire, are planning initial public offerings. Is Linux finally becoming a viable alternative to proprietary operating systems, or is this rise simply a byproduct of a mini-tech bubble?

The infamous Linux debut came from Red Hat, which IPO'ed in August 1999 and quickly became one of the hottest stocks of the dot-com era, skyrocketing to more than $151 per share before plummeting to below $7 during the ensuing bust. Then came SCO in March 2000, which opened at $104 per share and has spiraled downward ever since. Perhaps the most extraordinary open source IPO was that of VA Linux Systems (now VA Software, parent of the OSDN) in late 2000. The stock soared almost 500 percent on its first day, peaking at $320 per share, making it the largest single-day gain in IPO history. But again, the stock tanked over time, and now sits at just under $3 per share.

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