Linspire, the software company founded by MP3.com's Michael Robertson, has a new owner. But the San Diego company's former chief executive is questioning why minority shareholders weren't given more information about the deal.
Robertson, board chairman and majority shareholder of Linspire, said yesterday that the privately held company had been sold to Xandros of New York for an undisclosed price.
Linspire sent minority shareholders a three-paragraph letter last month announcing the agreement, and former Linspire Chief Executive Kevin Carmony, who left the company in August, posted it on the Internet.
The letter said the transaction was structured as an asset sale but didn't include a purchase price or tell what minority shareholders stood to gain.
“In classic Michael Robertson form, he has once again completely disregarded the 100-some-odd shareholders of Linspire by pulling off this deal without a shareholder meeting,” said Carmony on his blog.
Carmony did not return a phone call seeking comment. But he posted a video on his Web site that asked why more information wasn't provided.
“So the question for Michael is: What assets remain in the corporation, and how will the company go forward? Will there be a dividend to these shareholders? What happened to the cash and the assets and what kind of a deal did you structure?”
Robertson said that in any transaction, preferred shareholders and investors are at the front of the line to get paid. He said he couldn't get into specifics of the deal or say whether anything will be distributed to minority shareholders.
“I personally have invested more than $20 million in Linspire,” Robertson said. “It's important to know that when there are distributions, the investors always get their money back first, and if there's nothing left over it's not a devious plan to screw shareholders. It's the way it works.”
The sale of Linspire's assets probably didn't generate a big payday. The company, which has about 18 employees, posted revenue of roughly $3 million, according to estimates from Hoover's, a division of Dunn & Bradstreet.
Similar software companies have been selling recently for roughly 2.1 times revenue, says Software Equity Group, a San Diego investment bank specializing in software mergers and acquisitions.
Founded in 2001, Linspire made a low-cost Linux operating system for computers. Robertson originally named the company Lindows. Microsoft sued for trademark infringement of its Windows operating system. In a settlement, Microsoft agreed to pay $20 million if Lindows changed its name.
During the dot-com boom, Robertson founded MP3.com, an online music service that went public in 1999. The company fought protracted legal battles with record companies that alleged copyright infringement.
MP3.com was sold to Universal Music in 2001 for $372 million and was eventually shut down by Universal.
Xandros, which has about 125 employees, provides Linux software for the ASUS Eee PC, a low-cost computer appliance that is one of the few Linux-based machines to gain traction with consumers.
Chief Executive Andreas Typaldos said his company was most interested in Linspire's CNR technology, also called Click and Run. It's a Linux-software marketplace where developers post their programs for Linux users to download.
Mike Freeman: (760) 476-8209; mike.freeman@uniontrib.com
