SourceForge, Inc. (LNUX)

All Comments on LNUX

  • commenter
    no_thanks
    Aug 05 04:45 AM
    SourceForge: Undervalued Open-Source Stock [view article]
    LNUX is probably lucky to have the value it has. The problem is not their potential, but their management's continued inability to capitalize on that opportunity. From their roots as an open source profiteer (VA Consulting, I mean VA Linux, I mean VA Software) through their squandering of the largest single day run up in Wall Street history on through today... where they still can't pick a name, let alone a business model.

    I'd buy their stock in a hot second if I thought that someone like RHT might buy them. RHT turned their equally steller IPO and opportunity into a $5B market cap. But RHT is full of people who really get open source, not a a consulting firm that jumped on the badnwagon. And RHT isn't in the content business. And content is all LNUX has to offer.

    SourceForge(t) is a parking lot, and a cash/bandwidth hemorrhaging sieve. And they offer a service no one actually needs to exist (certainly not enough to pay for, especially given the declining cost of bandwidth and rising number of feature rich competitors from CollabNet to JasperSoft), but are willing to take advantage of. Slashdot carries the whole shebang and even they don't have the inbound ad revenue they should. Speaking of ad revenue, GOOG doesn't "subsidize" Firefox, they flat out pay them to be the default search tool bar. If you break that down to a cost per user, $.41 per user per year, assuming 120M users, you'll see that GOOG can afford to shit that cash at Firefox forever to get that user base. SUNW knows even less about and has even less success with open source than LNUX, so they'd only ride that torpedo all the way into the ground like Slim Pickens in Dr. Strangelove. Speaking of movies, LNUX reminds me of the line in "Swingers." "You got these claws and fangs and there's this scared little bunny of an opportunity, and you don't know what to do with these claws and fangs..." It's not in LNUX DNA to salvage this situation, and it's not worth it to the most likely suspects to bail them out. For example, RHT shareholders would issue a resounding WTF to buying a user generated news company.

    Dump sf.net and sell /. and maybe they're worth looking at, but even then it's a $20M a yr company at best.

     Reply
  • commenter
    chaosUnplugg
    ed
    Aug 04 07:47 PM
    My Website
    SourceForge: Undervalued Open-Source Stock [view article]
    [CORRECTION/ADDITION]

    >>essentiaserve.... (host for Jaspersoft) has a traffic ranking of
    >> 1,511,055 (v. SourceForge's 130).

    JasperForge.org has a traffic ranking of 83,774 source: www.alexa.com/data/det... (compare site with sourceforge.net on same this same traffic ranking graph)

    Reply
  • commenter
    chaosUnplugg
    ed
    Aug 04 06:57 PM
    My Website
    SourceForge: Undervalued Open-Source Stock [view article]
    LinuxWatch, let's just agree to disagree but the ground rules, at least, necessitate empirical corroboration of all claims...

    >Essentia ate Sourceforge’s lunch and they never even heard the
    >dinner bell.

    essentiaserve.com (host for Jaspersoft) has a traffic ranking of 1,511,055 (v. SourceForge's 130).
    source: www.alexa.com/data/det...


    >>Huh? How has the fact that the CEO gave up on the company
    >>improved matters? Maybe Ali resigned for a reason. Maybe
    >>there's no there there.

    Ali was fired. Advance approximately 21:10 into the Collins Stewart Growth Conference ir.corp.sourceforge.co... held July 9th in New York.

    LW, again, some of what you say is valid concerning SourceForge [prior] to q1 2008 (October 2008) with the hiring of Jonathan Sobel caps.fool.com/Blogs/Vi... and the firing of the CEO on June 10th, 2008.

    Reference: caps.fool.com/Blogs/Vi...     Reply
  • commenter
    LinuxWatcher
    Aug 03 10:00 PM
    SourceForge: Undervalued Open-Source Stock [view article]
    chaosUnplugged:

    Huh? How has the fact that the CEO gave up on the company improved matters? Maybe Ali resigned for a reason. Maybe there's no there there. Then we have this BS:

    >SourceForge is the global technology community’s hub for
    >information exchange, open source software distribution and
    >services, and goods for geeks.

    Sorry, even Dana Blankenhorn sees the writing on the wall here. From his article today on Essentia and the latest open source company to dump SourceForge.net, JasperSoft:

    blogs.zdnet.com/open-s...

    >Essentia ate Sourceforge’s lunch and they never even heard the
    >dinner bell.

    This is a standard trend. Open source companies and projects are moving off SourceForge.net as fast as they can. This is part of the reason the technology advertisers have abandoned advertising there. SourceForge.net's Alexa rankings have been dropping steadily for years. It is now down to #130. Steadily declining Alexa rankings are not a positive for a company that sells ads.

    Sorry guys. This is a walking dead company. It has been for years. We didn't even talk about the competition from Google (Google Code). I understand that Google Code now hosts as many open source projects as SourceForge.net and has higher traffic. Why would Google acquire a company they have already beaten in the market?
     Reply
  • commenter
    Greg Weston
    Aug 03 05:52 PM
    My Website
    SourceForge: Undervalued Open-Source Stock [view article]
    Chaos: Thanks for the traffic stats.

    ThinkGeek I do think is well executed. E-commerce will continue to grow and take a much bigger bite out of traditional retail. The shutdown of Sharper Image, which sells a lot of the same high-tech gadgets, is also certainly good news.     Reply
  • commenter
    Greg Weston
    Aug 03 05:44 PM
    My Website
    SourceForge: Undervalued Open-Source Stock [view article]
    LinuxWatcher: I never said the company was wildly profitable. As for Google, I was envisioning Google paying a premium for an exclusive ad deal, not LNUX just signing up for a standard ad words program. And they don't have to meet their current CPM numbers, a small decline would be fine if they can eliminate their in-house ad sales expenses.

    In general I think the advertising on the SF network of sites seems to be poorly executed. Last time I went to slashdot the only big ad was from Chevron advertising its ethanol program. I think it can do much better at monetizing these high-traffic/quality-r... sites, and at some point probably will.

    I am not impressed by your observation that a $50M/year open source project does not use SF.net, clearly at that size they would want their own site, and you are incorrect that there are no good projects there.

    The company is fairly valued if it does absolutely nothing new, but I see a lot of potential and little downside. $1.05/share is possible at year end 2009, but I think $2.25 is at least as likely.     Reply
  • commenter
    chaosUnplugg
    ed
    Aug 03 05:37 PM
    My Website
    SourceForge: Undervalued Open-Source Stock [view article]
    >>Now let’s talk about “simple organic growth”. There has been none
    >>here for years. In fact, one could argue that the company has been
    >>going the other way for years.
    >> Nothing indicates that the company can stop its decline
    >>and demonstrate any growth.


    SourceForge is the global technology community’s hub for information exchange, open source software distribution and services, and goods for geeks. The network of media and e-commerce web sites serves more than 33 million unique visitors each month from around the world. * Data collected from Google Analytics and Omniture.

    SourceForge.net [alone] traffic ranking is #130* (8/3) of [all**] websites neck and neck with c|net (126) which was recently acquired by CBS for $1.8B.

    ThinkGeek.com "saw a 29% eCommerce revenue growth in Q3 [2008, ending Jan 31 2008] compared to the third quarter of last year". ***

    *www.alexa.com/data/det...

    ** www.alexa.com/site/ds/...

    *** Q2 2008 Conference call and biz.yahoo.com/e/080311...     Reply
  • commenter
    chaosUnplugg
    ed
    Aug 03 04:46 PM
    My Website
    SourceForge: Undervalued Open-Source Stock [view article]
    With all due respect LinuxWatcher also failed to address where SourceForge (NASDAQ:LNUX) is at [now], including but not limited to bringing on Jonathan Sobel Oct 2007 (q1 2008) and Ali Jenab's resignation q4 2008. LinuxWatcher's post was accurate as of q4 2007 to early q1 2008 but it would be wreckless to conclude due diligence at LinuxWatcher's post as its ommission's also trivialize/negate its clear and presently stated shareholder value maximization strategy, hence its actual PV/DCF/stock price... All things equal, I believe LNUX [is] at a shareholder value maximization tipping point as Greg Weston's article suggests but for arguably different reasons vis-a-vis my Motley Fool Blog. Reply
  • commenter
    LinuxWatcher
    Aug 03 03:20 PM
    SourceForge: Undervalued Open-Source Stock [view article]
    Honestly there are so many things wrong with this analysis it's hard to know where to begin. You are correct in that the company is sitting on a lot of cash and that the enterprise value of the company is very low.

    However, while the observation that “it has turned a profit for 9 of the past 10 quarters” is technically correct, it ignores the fact that several of those quarters were profitable by virtue of the fact that the company sold off parts of the business and reported the sales proceeds as income. Specifically, the sales of Animation Factory and SourceForge Enterprise Edition. If you look in detail at the underlying financials you will see that the business is borderline break even. So they are not losing money, but they are not making money either. Track, for example, their cash position over the last 3 years ignoring new capital from any private placement rounds.

    It is also true that many people download software from SourceForge.net. However the most popular open source software is not on SourceForge.net. It’s interesting that none of the projects you mention in this article (Linux, Open Office, and Firefox) are hosted on SourceForge.net. SourceForge.net is something of the ghetto of open source, mostly hosting small irrelevant bits of code. SourceForge.net is also commonly used to save hosting costs. A few larger projects really host the project elsewhere but utilize SourceForge’s download bandwidth to save costs.

    Turning to your catalysts, why would companies like Sun or Red Hat want SourceForge? Both already have broader reach than SourceForge. Buying SourceForge would not help either “expand its open-source software business” since SourceForge is not in the open source software business. The primary source of revenue (68%) at SourceForge is sales of t-shirts, coffee mugs and other “geek” toys at their e-commerce site ThinkGeek.com. The rest of their revenue comes from advertising. Why would Sun or Red Hat want a retail t-shirt shop? Or a place that does a poor job selling ad banners? SourceForge makes no sense business wise to either.

    Next, your idea that SourceForge could improve profitability by signing an exclusive advertising deal with Google is naive and laughable. Google is an extremely poor partner for monetizing ad revenue. They pay very little per ad served on partner sites. If you knew anything about what Google typically pays per ad you would realize that SourceForge advertising revenue would actually drop considerably were they to funnel all of it through Google. The only way to high CPM numbers is direct ad sales (which is why all the top media properties do the bulk of their ad business direct). Remnants go to Google for a couple of dollar CPMs.

    Now let’s talk about “simple organic growth”. There has been none here for years. In fact, one could argue that the company has been going the other way for years. That’s why the stock is trading so low; investors have lost faith in the ability of the company to generate any organic growth. They have a history of failing to execute that spans years and is now ingrained in the corporate culture. Nothing indicates that the company can stop its decline and demonstrate any growth.

    Your discussion about Microsoft is an interesting but totally irrelevant one. The failure of Vista and corresponding growth at companies like Canonical (Ubuntu Linux) and Apple is totally irrelevant to SourceForge. SourceForge.net has nothing to do with Linux, and the success or failure of Linux has no impact on SourceForge. (Well, I suppose more Linux users might be buying t-shirts at ThinkGeek.)

    Bottom line – unless SourceForge makes some dramatic changes in its business the company is going nowhere. At about $1.35 per share it’s probably in the right price range - cash on hand plus a small premium for a handful of decaying web sites. Nothing here indicates that's likely to change in the foreseeable future.


     Reply
  • commenter
    chaosUnplugg
    ed
    Aug 03 11:21 AM
    My Website
    SourceForge: Undervalued Open-Source Stock [view article]
    Excellent article and impressive credentials (accepted to Harvard Law at 19)...I have been following LNUX for appx 1 year and have some supporting information here caps.fool.com/Blogs/Vi... Reply
  • commenter
    MistaWhite
    Aug 03 10:18 AM
    SourceForge: Undervalued Open-Source Stock [view article]
    They also....

    "announced the release of an application for the iPhone and iPod Touch that will allow users to easily view and explore the latest news items from the SourceForge web sites. The application, called "SFNetNews," will provide content from Slashdot, SourceForge.net, and freshmeat."     Reply
  • commenter
    SeekingAlpha
    Editors
    Apr 06 05:17 AM
    My Website
    General Discussion on LNUX
    Is this a buy or a sell? Reply
  • commenter
    WILLARD
    CARTER
    Oct 01 05:55 PM
    VA Software Comments On SourceForge and Slashdot [view article]
    would like expert opinion as to when lnux might reach 5 dollars per share Reply
  • commenter
    Perry
    Addison
    Sep 10 06:17 PM
    Chart: Internet Content & Community Stocks - Annual Earnings Growth [view article]
    This could use an update. TSCM has y/y growth above 100% now. Earnings estimates are similar to YHOO,but it trades at a 60% discount. I don't see how that can last. Reply
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