The recent slump in confidence in technology stocks seems not to have had an adverse effect on Red Hat's initial public offering (IPO).
The open-source software vendor launched its IPO of 6 million shares of common stock this week, and watched the share price triple over its offering price in early trading.
Shares opened at $US46 and climbed to $52.06 by late afternoon -- much higher than the offering price of $14 per share. Dow Jones estimated Red Hat's market value at $2.96 billion.
Red Hat is the leading vendor of the Linux open-source operating system, which is becoming an increasingly popular alternative to Microsoft's Windows software on corporate network and Web servers. Open-source software such as Linux is built by unpaid developers over the Internet, freely distributing and modifying the code. Red Hat has a 49 per cent share of the Linux market, according to International Data Corp.
One analyst said Red Hat's IPO should not necessarily be compared to recent ones from other high-profile technology companies, which have been largely Internet-centric.
"I think the reason Red Hat is having a little more success is that it's not an Internet IPO," said Jonathan Eunice, an industry analyst at Illuminata in New Hampshire.
"The success of their business could be greatly affected by success on the Internet -- because its most interesting commercial use is by ISPs [Internet service providers] and ASPs [application service providers], the people who run the Internet and Internet applications -- but it is a product company," Eunice said. "They sell something that is not just a diffuse hope that the Internet changes everything."
Whether other Linux-centred companies can follow Red Hat's path to a strong IPO remains to be seen. German Linux distributor SuSE GmbH may be next to try; it recently acknowledged its own steps toward the common-stock milestone.
Red Hat originally announced plans for its IPO on June 4. Goldman, Sachs & Co is serving as lead underwriter, with co-managers Thomas Weisel Partners LLC, Hambrecht & Quist LLC and E*OFFERING.