Lindows postpones IPO indefinitely

Lindows, the Linux-based software developer best known for its legal battles with Microsoft Corp., has indefinitely shelved its plans to become a publicly traded company due to "current adverse market conditions," it announced Wednesday.

Lindows, based in San Diego, has not withdrawn its registration statement with the U.S. Securities and Exchange Commission (SEC) and hopes to proceed with the initial public offering (IPO) at an unidentified future date once market conditions and public company valuations improve, the company said in a statement.

Lindows representatives could not immediately be reached for comment.

The company originally had filed its IPO application with the SEC in April, but it announced last week that in a further filing with the SEC it had lowered the expected price range for its shares. It had planned in July to sell 4.4 million shares for between $9 and $11 but lowered that range to between $7 and $9.

Founded in July 2001, the desktop Linux specialist shipped its first product in January 2002 but has been renowned primarily for its two-and-a-half-year trademark dispute with Microsoft over the similarity of the LindowsOS product name to the Redmond, Washington, software giant's operating system software, Windows.

In July, Lindows agreed to change its legal name to Linspire by Sept. 14 and to end the use of the Lindows name in its products in exchange for $20 million from Microsoft. The company had already formally changed the name of its desktop operating system to Linspire in April because of the legal battle, which began in December 2001 and included legal actions by Microsoft in the U.S., Canada, Finland, Sweden, the Netherlands, France and Spain.

"With its Microsoft legal issues behind it, the company's primary focus should be on building awareness around the new name and building enthusiasm for its products," said Joe Wilcox, a senior analyst at Jupiter Research, in New York.

Though Lindows was able to generate a lot of initial awareness of the company though its dealings with Microsoft, the company needs to launch the second wave of its marketing efforts, be it over the Web or though newsgroups, to switch consumers' focus to its products, and an IPO may detract from those efforts, Wilcox said. "It is a good time, given the name change, to evaluate what its value proposition is and if (its business) model is the right one for selling to customers," he said.

In 2003, Lindows reported revenue of $2.1 million, up from a mere $63,131 in 2002, and said it had been able to reduce its net loss to $4.1 million in 2003, from $6.7 million in 2002.