VA Linux Drops 90% Of Sales During Transition To SoftwareVA Linux Drops 90% Of Sales During Transition To Software

VA Linux Systems Inc. (LNUX-Nasdaq), in its first full quarter since abandoning the Linux-compatible server business to pursue software-development applications, saw revenue drop 90% from the previous three months. For its first quarter ended Oct. 27, excluding one-time costs, VA Linux lost $8.7 million on sales of $5.6 million. That included $3.9 million in sales of its SourceForge collaborative software. The company predicts second-quarter sales of $4 million to $4.5 million and a loss of $8 million to $8.5 million. VA Linux recently gained some impressive clients, including Pfizer and Hewlett-Packard, but Gartner analyst George Weiss warns that the difficulty of moving into the software market while facing growing competition from the likes of CollabNet Inc. makes the company a long shot.