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EXHIBIT 99.1
VA LINUX SYSTEMS' FIRST QUARTER RESULTS TO BE BELOW EXPECTATIONS
FREMONT, Calif.--(BUSINESS WIRE)--Nov. 6, 2000--VA Linux Systems, Inc.
(Nasdaq:LNUX - news) announced today that revenue for its first fiscal quarter,
ended October 27, 2000, will be below the Company's expectations, primarily due
to slower-than-expected sales growth from new customers in the "Dot-com" sector.
The Company expects fiscal first quarter revenue to grow 10% from the previous
fiscal quarter and 275% from the same quarter in the previous year.
The Company expects to report a loss per share excluding non-cash items of $0.14
to $0.16, primarily due to lower revenues and increased spending based on higher
revenue expectations. Actual results will be announced on November 16, 2000
after the market closes, followed by a 2:00 pm PST conference call.
The Company expects revenue for the fiscal year 2001 to be approximately 2.25
times fiscal 2000 revenue. This represents a reduction from the previous
guidance of 2.5 times fiscal 2000 revenue. The Company still anticipates
becoming profitable (excluding non-cash charges) no later than the end of
calendar 2001.
"Although repeat business with our existing customers remained strong during the
first fiscal quarter, sales to new customers in the `Dot-com' sector were below
our expectations. In particular, the number of new customer opportunities from
venture-funded `Dot-coms' declined faster than anticipated," said VA Linux
Systems CEO Larry M. Augustin. "Going forward, we expect to benefit from our
strategy of pursuing a broader account base, including business from large
corporate and enterprise accounts. These customers require longer sales cycles,
and we did not receive significant contribution to revenue from that sector in
the fiscal first quarter."
ABOUT VA LINUX SYSTEMS
VA Linux Systems (Nasdaq:LNUX - news) is the world's Linux leader. The expert
provider of Linux and Open Source solutions for the Web, VA Linux offers a
single point of contact for highly customized Linux servers and storage --
featuring the industry's first Build-to-Order Software -- as well as
professional consulting services and support. VA Linux Systems' mission is to
make its customers successful through the use of Linux and Open Source --
whether they are e-businesses rapidly expanding their Internet infrastructures,
or technology companies leveraging the power and methodology of Open Source
software development. As part of its commitment to expanding the Open Source
community, VA Linux Systems operates the Open Source Development Network (OSDN).
A network of the leading Internet sites for Open Source development,
distribution and discussion, OSDN includes SourceForge, Freshmeat.net,
Slashdot.org and Linux.com. Founded in 1993 and headquartered in Fremont,
Calif., with offices across North America, Europe and Japan, VA Linux is located
on the Web at www.valinux.com.
Note to Editors: VA Linux Systems, OSDN and SourceForge are trademarks of VA
Linux Systems, Inc. Linux is a registered trademark of Linus Torvalds. All other
trademarks are property of their respective owners.
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Note Regarding Forward-Looking Statements: This press release contains
forward-looking statements, including statements regarding anticipated actual
financial performance and results of operations for the Company's first fiscal
quarter of 2001; future financial performance and results of our operations; and
the Company's sales strategy and anticipated benefits therefrom. Actual results
may differ materially from those projected in such forward-looking statements
due to various factors, including: confirmation of the Company's actual results
for the first fiscal quarter of 2001; VA Linux's quarterly sales cycle and
fluctuation in demand for our products and services, with increased fluctuation
due to VA Linux's concentration of customers in the Internet infrastructure
industry; competition with, and pricing pressures from, larger, more established
companies and smaller, general purpose manufacturers; the fact that VA Linux has
incurred and expects to continue to incur substantial losses; VA Linux's
reliance on sales of server products and its success in expanding its services
business; manufacturing and sourcing risks; the effectiveness of VA Linux's
ongoing business strategy; the rate of growth and acceptance of Linux and the
Open Source software development model; VA Linux's ability to continue to
introduce new products and services, and to expand its business and operations,
particularly internationally; VA Linux's dependence upon an Open Source business
model, independent third-party Linux developers, and its single source contract
manufacturer and suppliers; VA Linux's reliance upon strategic relationships
with other companies and its ability to negotiate and implement specific terms
relating to them; the scarcity of Linux-based applications; VA Linux's
dependence on its Internet-based businesses; the enforceability of the GNU
General Public License; VA Linux's ability to attract and retain qualified
personnel, especially in professional services and overseas; VA Linux's
acquisition strategy and its ability to successfully integrate Andover.Net and
other acquired companies into its operations; market acceptance of Linux and
Open Source software generally; rapid technological and market change; the
impact of rapid evolution of the Linux market on our ability to forecast demand
and results; claims and potential damages resulting from information or postings
on our Internet sites; and risks associated with the Internet infrastructure and
regulation. Investors should consult VA Linux's filings with the Securities and
Exchange Commission, including its Annual Report on Form 10-K for the year ended
July 28, 2000, for further information regarding these and the other risks of
the Company's business. These documents are available at the SEC Web site:
www.sec.gov.
