Geeknet

Geeknet, Inc.

Type	Public
Traded as	NASDAQ: GKNT
Industry	Online media; retail
Founded	November 1993 (1993-11)[1]
Founder(s)	Larry Augustin & James Vera (VA Research)
Headquarters	Mountain View, California
Key people	Kenneth Langone (Chairman and Interim CEO)
Services	Freshmeat; Slashdot; SourceForge.net; ThinkGeek
Total assets	74.2 million USD (unaudited 2008-12-31)[2]EX-99.1
Total equity	62.6 million USD (unaudited 2008-12-31)[2]EX-99.1
Owner(s)	William M. Sams (21.5%) institutional investors (18.1% combined) (all others under 5% each)[3]
Website	geek.net

Geeknet, Inc. (NASDAQ: GKNT) is a Mountain View, California company that owns several computer tech-related websites and the online retailer ThinkGeek. Formerly known as VA Research, VA Linux Systems, VA Software, and SourceForge, Inc., it was founded in 1993.

History

VA Research

VA Research was founded in November 1993^[1] by Stanford graduate student Larry Augustin and James Vera. Augustin was a Stanford colleague of Jerry Yang and David Filo, the founders of Yahoo!.^[4] VA Research built and sold personal computer systems with the Linux operating system installed, as an alternative to more expensive Unix workstations available at the time.^[5] At the time they started operations, they were one of the first computer vendors to offer Linux as a pre-installed operating system.^{[citation needed]} During its initial years of operation, the business was profitable and grew quickly, with over $100 million in sales and a 10-percent profit margin in 1998. It was the largest vendor of pre-installed Linux computers, having approximately 20 percent of the Linux hardware market.^[5]

In October 1998, the company received investments of $5.4 million ($7 million adjusted for inflation) from Intel and Sequoia Capital.^[6]

In the spring of 1999, VA Research purchased Enlightenment Solutions, marketing company Electric Lichen L.L.C., and VA's top competitor, Linux Hardware Solutions.^[5] That year, VA Research also won a business-plan competition for the right to operate the linux.com domain.^[4] It was rumored that Microsoft and other bidders (Compaq, Red Hat, and HP) had offered more cash for the domain, but lacked detailed plans for its use.^{[citation needed]} In May 1999, VA created a Linux Labs division, hiring former linux.com domain holder and programmer Fred van Kempen, and programmers Jon "maddog" Hall, Geoff "Mandrake" Harrison, and San "nettwerk" Mehat.^[4] VA began porting Linux to the new IA-64 processor architecture in earnest. Intel and Sequoia, along with Silicon Graphics and other investors, added an additional $25 million ($34 million adjusted for inflation) investment in June 1999.^[6] By then, VA had also begun to make plans to change its name to VA Linux Systems and conduct an initial public offering of its stock.^[4]

Initial public offering

LNUX stock price (9 December 1999 through 9 December 2000)

VA Linux Systems took its stock public in an initial public offering (IPO) on 9 December 1999, under the stock symbol LNUX. The IPO offered shares at $30, but the traders held back the opening trade until the bids hit $299. The stock popped up to $320 later in the day, and closed its first day of trading at $239.25—a 698-percent return on investment. However, this high-flying success was short-lived, and within a year the stock was selling at well below the initial offer price. As of 2005^[update], this was still the most successful IPO of all time. The stock price reached an intra-day peak of 54 cents on 24 July 2002. It then soared more than 1,000 percent to an intra-day high of $6.38 on 11 September 2003. As of 26 November 2006, the stock closed at $4.64.^[7]

Many authors of free software were invited to buy shares at the initial price offering as part of a "friends and family" deal.

Due to the immense difference between the IPO offering price and the opening price, VA Linux did not actually raise much capital in the offering, and the stock price sagged as investors realized that the company's revenue and profitability were not likely to justify the share price. On 3 February 2000, the company announced that it was acquiring Andover.net (which had recently conducted its own initial public offering).^[8] This acquisition gave VA Linux popular online media properties such as Slashdot, Andover News Network, Freshmeat, NewsForge, linux.com, Kuro5hin (until 2001^[9]), and a variety of online software development resources, as well as a stable of writers such as Rob Malda, Robin Miller, Jack Bryar, Rod Amis, Jon Katz, and "CowboyNeal". Shortly after, all of Andover.net's assets were transferred to a new division of VA Linux called the Open Source Developers Network (OSDN).^[10]

The acquisition was controversial within the Linux community. Bryar, in particular, wrote multiple articles suggesting that most Linux-oriented businesses were poorly thought out. He cautioned that the excitement over Linux was little more than another Internet bubble.^{[citation needed]} Nonetheless, this acquisition eventually allowed the company to shift its business model from Linux-based product sales to specialty media and software development support.

VA Software

VA Linux's original equipment and systems business model encountered stiff competition from other hardware vendors offering Linux as a pre-installed operating system, such as Dell. The company booked operating losses as a result. On 26 June 2001, VA Linux decided that they would leave the systems-hardware business and focus on software development.^[9][11] During the summer of 2001, all of the hardware-focused employees were dismissed as a result of this shift in the company's business model.

On 6 December 2001, the company formally changed its name to VA Software, recognizing that the majority of their business was now software development and specialty news and information services. However, the company's Japanese subsidiary still uses the name "VA Linux Systems Japan K.K." In January 2002, Sumitomo Corporation became the largest shareholder in VA Linux Systems Japan, and the Japanese subsidiary became independent of VA Software.

OSDN was renamed to Open Source Technology Group (OSTG) in 2004.^[12]

VA Software sold Animation Factory to Jupitermedia Corporation on 27 December 2005,^[13] and SourceForge Enterprise Edition to CollabNet on 24 April 2007.^[14]

SourceForge

Sourceforge Inc. logo

VA Software changed its name to SourceForge Inc. and merged with OSTG on 24 May 2007;^[15] eliminating OSTG as a separate entity.

Scott Kauffman was nominated as President and CEO of SourceForge on 4 December 2008. Robert M. Neumeister, Jr., Chairman of the Board of Directors of SourceForge, described Kauffman as having "the level of energy and vision that we believe will help build SourceForge into a major Internet company. He brings more than 20 years of executive experience in digital entertainment and consumer-facing Internet brands. The team is extremely excited to be adding an individual with such rock-solid leadership skills and experience."^{[citation needed]}

On 5 January 2009, Scott Kauffman was appointed President and CEO of SourceForge, Inc.

Geeknet

SourceForge, Inc. became Geeknet, Inc.^[16] on 4 November 2009 by creating the latter company and merging SourceForge into it.^[2]EX-3.1

GeekNet President and CEO Scott Kauffman resigned on 4 August 2010. He was replaced by Executive Chairman Kenneth Langone.^[17] On 10 August, the company terminated the employment of Jason Baird, the Company’s Chief Operations Officer, and Michael Rudolph, the Company’s Chief Marketing Officer, both effective 31 August 2010. It also terminated Jay Seirmarco, the Company’s Chief Technology Officer, effective 30 September 2010.^[18]

Effective 5 August 2010, Geek.net changed their NASDAQ stock symbol to GKNT.^[17]

Effective 31 Jan 2011, Geek.net appoints Matthew C. Blank, former CEO and Chairman of Showtime Networks as a member of its board of directors.^[19]

Operations

Geeknet operates SourceForge.net, Slashdot, Freshmeat and the e-commerce site ThinkGeek.

Earnings

On 21 February 2006, VA Software reported its first profitable quarter.^[20] Net income for the second fiscal quarter^[when?] stood at $10.5 million, or 17 cents per share, compared to a net loss of $702,000, or a penny a share, in the previous year's second quarter. Excluding one time gains from the sale of Animation Factory, VA's profit that quarter would have been $1.1 million, or 2 cents per share.^[20] VA followed this performance with two more consecutive profitable quarters, earning $1.1 million in the third quarter of 2006^[21] and $700,000 in the fourth fiscal quarter of 2006,^{[citation needed]} which ended on 31 July. VA ended the fiscal year with $51.9 million of cash, up from $36.6 million the previous year.^{[citation needed]} The company remained profitable until the fourth quarter of 2007. Since then, with the exception of the fourth quarter of 2009, the company returned only money-losing quarters through May 2010.^[22]

References

1. ^ ^{a b} "VA Research Linux Systems announces support for The Linux Beer Hike." (Press release). Mountain View, California: VA Research Inc.. 1998-11-12. http://electriclichen.com/linuxbierwanderung/va_release/release.html. Retrieved 2009-12-15. 
2. ^ ^{a b c} SourceForge, Inc. (2009-11-04). "Form 8-K: Current report (SEC Accession No. 0001144204-09-056526)". EDGAR. U.S. Securities and Exchange Commission. http://www.sec.gov/Archives/edgar/data/1096199/000114420409056526/0001144204-09-056526-index.htm. Retrieved 2009-11-06. 
3. ^ "Geeknet Inc: Ownership". MSN Money. 2009-08-21. http://moneycentral.msn.com/ownership?Holding=5%25+Ownership&Symbol=LNUX. Retrieved 2009-11-06. 
4. ^ ^{a b c d} Mardesich, Jodi (July 5, 1999). "VA Linux Systems". Fortune. http://money.cnn.com/magazines/fortune/fortune_archive/1999/07/05/262457/index.htm. Retrieved 2009-11-06. 
5. ^ ^{a b c} Malik, Om (3 May 1999). "Dell plus Sun equals VA Research". Forbes.com. http://www.forbes.com/1999/05/03/feat.html. Retrieved 2007-06-13. 
6. ^ ^{a b} Shankland, Stephen (1999-08-09). "VA Linux programs for the future". CNET News. http://news.cnet.com/VA-Linux-programs-for-the-future/2100-1001_3-229547.html. Retrieved 2009-12-15. 
7. ^ ""SourceForge, Inc. (LNUX)" interactive price graph". Yahoo! Finance. http://finance.yahoo.com/q/bc?s=LNUX&t=my&l=on&z=l&q=l&c=. Retrieved 2007-06-13. 
8. ^ VA Linux acquires Andover.net, ZDNet Australia, 13 October 2000
9. ^ ^{a b} Andrew Orlowski, (31 October 2001) VA drops Linux name, boots out Kuro5hin, The Register
10. ^ Compaq, EMC, HP, IBM, Intel and Sun Join Open Source Development Network 'OSDN' as Technology Partners., Business Wire, 16 Aug 2000
11. ^ "VA Linux Outlines New Strategic Focus on Software". Press Releases. VA Software. 27 June 2001. Archived from the original on 2006-05-29. http://web.archive.org/web/20060529013422/http://www.vasoftware.com/news/press.php/2001/68.html. Retrieved 2007-06-13. 
12. ^ "Post on Dean Henrichsmeyer’s personal Web site, 27 July 2004". Beret.net. 2004-07-27. http://beret.net/blog/2004/07/27/ostg-open-source-technology-group/. Retrieved 2010-05-10. 
13. ^ "Jupitermedia's Jupiterimages Division Announces Acquisition of Animation Factory". 27 December 2005. http://www.webmediabrands.com/corporate/releases/05.12.27-JI_AnimationFactory.html. Retrieved 2010-10-07. 
14. ^ Taft, Darryl K (24 April 2007). "CollabNet Acquires SourceForge". eWeek.com. http://www.eweek.com/article2/0,1895,2121677,00.asp?kc=EWNAVEMNL042707EOAD. Retrieved 2010-10-07. 
15. ^ "GEEKNET, INC - 10-Q - 20081209 - FINANCIAL_STATEMENTS SEC filing". Yahoo.brand.edgar-online.com. http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6291662-6587-85723&type=sect&TabIndex=2&companyid=68081&ppu=%252fdefault.aspx%253fcik%253d1096199. Retrieved 2010-05-10. 
16. ^ "SourceForge, Inc. Changes its Name to Geeknet, Inc." (Press release). Mountain View, California: Geeknet, Inc.. 2009-11-04. http://geek.net/press/sourceforge-inc-changes-its-name-to-geeknet-inc/. Retrieved 2009-01-04. 
17. ^ ^{a b} "GEEKNET ANNOUNCES SECOND QUARTER FINANCIAL RESULTS AND DEPARTURE OF PRESIDENT AND CEO SCOTT KAUFFMAN" (Press release). Mountain View, California: Geeknet, Inc.. 2010-08-04. http://geek.net/press/geeknet-announces-second-quarter-financial-results-and-departure/. Retrieved 2010-08-08. 
18. ^ GeekNet, Inc.. "SEC Form 8-K dated August 6, 2010". EDGAR. U.S. Securities and Exchange Commission. http://secfilings.com/searchresultswide.aspx?TabIndex=2&FilingID=7405347&type=html&companyid=68081&ppu=%2fdefault.aspx%3fformtypeid%3d%26amp%3bindustryid%3d%26amp%3bticker%3dLNUX%26amp%3bauth%3d1. Retrieved 12 August 2010. 
19. ^ GlobeNewswire. "Geeknet Appoints Matthew C. Blank To Its Board Of Directors". The Street. http://www.thestreet.com/story/10992240/1/geeknet-appoints-matthew-c-blank-to-its-board-of-directors.html. Retrieved 11 February 2011. 
20. ^ ^{a b} "VA Software Reports First Profitable Quarter On 57% Year-Over-Year Revenue Growth". Press Releases. VA Software. 21 February 2006. Archived from the original on 2007-06-29. http://web.archive.org/web/20070629185825/http://web.sourceforge.com/news_archive/2006/1560.php. Retrieved 2007-06-13. 
21. ^ "VA Software Reports Second Consecutive Profitable Quarter On 55% Year-Over-Year Revenue Growth". Press Releases (index). VA Software. 23 May 2006. Archived from the original on 2007-06-29. http://web.archive.org/web/20070629190331/http://web.sourceforge.com/news_archive/2006/1574.php. Retrieved 2007-06-13. 
22. ^ Bloomberg data for LUNX US Equity retrieved on 21 May 2010

External links

• Official website
• CNET: VA Linux files IPO plans (9 October 1999)
• Salon: Dissecting the VA Linux IPO (10 December 1999)
• CNET: VA Linux leaves hardware, lays off workers (27 June 2001)
• Wordpress: VA Software reports first profits ever. 60-percent stock rise before the report, and 40-percent rise after. (23 February 2006)
• VA Linux Systems Japan K.K.
• Aservo - Distributor of SourceForge Enterprise Edition in Europe