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Breaking News (from) Seeking Alpha: "SourceForge: Undervalued Open-Source Stock"

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August 03, 2008 – Comments (2) | RELATED TICKERS: GKNT , RHT , JAVA.DL

(Aug 03 2008 7:55 AM) "...SourceForge (LNUX) is a small internet company that had a wild beginning. At the height of the internet bubble, its stock, like fellow Linux stock Red Hat, soared to insanely high values, peaking at over 400 per share. But the company’s current price is too low, and opportunities abound.

The first thing you need to know about the company, now trading around $1.35, is that it is sitting on about a dollar a share in net cash and other hard assets, and has no long-term debt. The second thing is that it has turned a profit for 9 of the past 10 quarters. The third thing is that it owns a number of high-traffic websites, including Slashdot, Linux.com, Unix and Palm software site freshmeat.net, online retailer ThinkGeek.com, and SourceForge.Net, the home page for a large number of open source software projects.

Right now hundreds of millions of dollars are flowing into open source software development...I see three potential catalysts that can propel LNUX upward. First, LNUX could be purchased by a company looking to expand its open-source software business. The two most obvious buyers are Sun Microsystems (JAVA) and Red Hat (RHT). A partial sale of one of LNUX’s discrete sites is also a possibility. Both JAVA and RHAT are vastly larger than LNUX, making the company a tiny snack to digest...As a long term play, LNUX’s downside is limited by its big pile of cash and consistent if not amazing profitability. Its upside, however, is huge. When Apple was at its nadir five years ago, it traded for under $7 a share. Now it is at $170. Driving much of Apple’s incredible growth has been consumer apathy towards Microsoft products...We are already seeing governments, especially in South America and the EU, make the switch to open-source for all their computers, not just servers. There is simply no other company positioned to capitalize on this trend that is selling at such a cheap ratio to earnings as LNUX..."  source: Aug 3 2008 Seeking Alpha

Comment: This analysis dovetails substantively with mine however, Seeking Alpha has failed to mention several facts: SourceForge's 9% ownership of Collabnet, SourceForge's management changes/current strategy, and the fact CBS may also be a suitor, in addition to JAVA, and RHT (see References below).

 

References:

$moking Gun$ and SourceForge (NASDAQ:LNUX)s Blueprint to $20/share.

CBS Eyes C|NET for $1.8B, LNUX In Its Sites?

 

2 Comments – Post Your Own

#1) On August 03, 2008 at 2:09 PM, hall9999 (99.34) wrote:

  According to nasdaq.com the short interest has been gradually declining from nearly 10M a year ago.  And in the last month it has dropped from 5M to 566K. 

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#2) On August 04, 2008 at 10:58 PM, JakilaTheHun (99.94) wrote:

How is this "breaking news"? 

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