[linux-elitists] Red Hat borrows $500M

Brian McGroarty brian@mcgroarty.net
Tue Jan 6 23:28:25 PST 2004


On Tue, Jan 06, 2004 at 07:13:41PM -0700, Jonathan Corbet wrote:
> Red Hat is issuing debentures for $500M, due in 20 years, at a 0.5%
> interest rate.
> 
>   http://www.businesswire.com/cgi-bin/f_headline.cgi?bw.010604/240065945&ticker=RHAT
> 
> They are convertible for stock at $25/share.  
> 
> Question: why would Red Hat, with $300M in cash and investments, borrow
> $500M more?  If they're doing something involving that sort of cash, I'd
> sure like to know about it...

To enter a war against a company as well-entrenched as MS is to enter
a war of attrition. I suspect the key here isn't what they're doing
with the available funds, but how long they think they'll need to keep
doing it before folks start to take notice.

Red Hat hasn't yet established itself as a company that will always be
there for the customer. I think they're still regarded more as a
convenient source of cheap CDs than as a major UNIX vendor/MS
rival.

And dropping the desktop with their flamboyant "okay, we've been
living a lie -- take those boxes back to Windows" proclamation sure
didn't help in solidifying their image, either.
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