MIT Affiliates Receive Red Hat IPO LettersBy Frank Dabek
Editor in Chief
Red Hat Inc., distributor of the popular Red Hat Linux operating system, has taken the unusual step of offering individuals the opportunity to participate in its initial public offering of common stock, expected to occur sometime this month.
Several MIT students and affiliates are among the perhaps 1,000 individuals who received a letter addressed to “open source community members.” Red Hat attempted to target those individuals who have contributed to the open source software movement. Linux, on which the Red Hat operating system is based, is an open source product, meaning that its source code is publicly available.
Derek A. Atkins ’93 received the offer due to his contributions to the linux kernel made while modifying it to support the Andrew File System used by Athena. Atkins plans to take advantage of the offer and has already made an offer to purchase shares of the company, which will most likely open between 12 and 20 dollars.
Atkins was supportive of Red Hat’s offer of stock, which “gives the people who have helped Red Hat the opportunity to get something back,” he said.
Other technology IPOs have performed well in the recently bullish market, and Red Hat is widely expected to rise steeply after it opens. Of his investment prospects, Atkins said, “I’m willing to lose, and if I win -- great.”
Some have difficulty participating
Although Red Hat’s offer to allow contributors access to the IPO was initially received warmly in linux news forums such as Slashdot <http://www.slashdot.org>, many recipients became dissatisfied when they failed to meet the eligibility requirements of E*TRADE, one of the IPO’s underwriters, and were unable to purchase stock.
C. Scott Ananian G, a graduate student in the Laboratory for Computer Science, liquidated savings bonds given to him in his childhood to open an E*TRADE account only to be rejected from the IPO offer.
Ananian, who received the offer due to his work on several open source utilities, said that the rejection was “somewhat of a surprise.”
Tim Alban, an E*TRADE spokesman, pointed out that the invitation letter contained notice that all applicants would be required to meet an eligibility profile. For those who were rejected by the on-line form, E*TRADE is reviewing their applications on a “case by case” basis.
Many rejected invitees are also being allowed to fill out the form again. Ananian, however, rejected this offer, which he feels is an invitation to lie. He said that open source developers “don’t want to feel that to take part [in the IPO], we have to pretend that we are millionaires.”
In fact, Ananian hopes to turn his rejection into a struggle for open source recognition by authoring an essay “My Linux Lament” in the on-line journal Salon <http://www.salon.com>. “I wanted to set the tone of the debate,” he said.
Ananian says that his concern with the rejection is “not really money; it’s respect.” He sees the issue as a “conflict of worlds.” Red Hat is torn between their desire to “give back to the community” in the open source model and the traditional economic reality which dictates that one “can’t play unless you are one of the ‘big guys’,” he says.
Whether or not he receives the chance to buy Red Hat stock Ananian would “like to see the issue resolved in a public way” which “validates that we (open source developers) are actually important” to the future economy.