Linspire, née Lindows, the originally feisty Linux house that threatened to deprive Microsoft of its precious Windows trademark - and got $20 million out of it from Microsoft - has collapsed into Xandros. Xandros, like Linspire, was one of the Linux 'unfaithful' that signed a patent covenant with Microsoft.
It was the original source of Linspire’s Debian-based distribution, long before Linspire went over to Ubuntu last year.
Anyway, the acquisition has former Linspire president and CEO Kevin Carmony, who disclosed its existence, fit to be tied. On his blog he calls it a “secret backroom deal” because nobody asked the acquiescence of Linspire’s 100 or so minority stockholders like him.
According to the notice of sale Carmony got Monday – 11 days after the deal was signed – Xandros acquired Linspire’s Linux assets after Linspire changed its name to Digital Cornerstone.
The exchange includes people but by Carmony’s count after a recent layoff Linspire only had eight people left, down from a peak of nearly 100. (Linspire’s most recent CEO, Carmony’s replacement, Larry Kettler will be VP of business development at Xandros.)
Carmony, who left Linspire this time last year, says he doesn’t know what Linspire went for but suggests that he and the rest of the disenfranchised won’t realize much of a return; and he blames Linspire founder and chairman Michael Robertson.
“To me,” he writes, “this looks like Michael, the ‘captain’ of the Linspire ship, sees the boat sinking , so he casually tells the passengers on the ship that he’s just going on a quick supply run, jumps on the only lifeboat with any cash and valuables, paddles off to safety, and leaves everyone else behind to sink.”
Carmony says, “I predict this was done to: 1) help Robertson drain the company of its cash and resources. When I left Linspire, we had a very profitable year and the company had millions in the bank. I predict Robertson has moved this money to himself, family and his other companies, leaving Linspire’s minority shareholders with nothing. 2) help Robertson save face by issuing a ‘Linspire Acquired by Xandros!’ press release, instead of living with the public humiliation that Linspire failed under his leadership. (Although, being outlasted by Xandros isn’t much less embarrassing.) Such a press release will of course be meaningless unless the acquisition was substantial. As a shareholder, I will eventually find out. 3) Give Xandros a press release and perhaps some way for them to spin this to investors to raise money.”
Carmony says he’d be happy with 50 cents a share, but doubts that the transaction will come to 10 cents a share and to prove it offers them his position for that. He wants no “bogus, inflated valuation based on Xandros stock.”
Carmony also shares the circumstances surrounding his departure from Linspire:
“One of the reasons I resigned from Linspire is that Michael wanted to issue a dividend only to himself and his father-in-law. (We had a very profitable year, and there was a lot of cash in the accounts.) I told him the way the company was structured any dividend would need to be issued to ALL shareholders, not just him and his father-in-law. He protested to me, saying it was common to do this in companies. I went out and had TWO different outside law firms confirm I was right, and that ‘this’ company (Linspire) was not organized that way. Once Michael saw me pushing back, he started making obvious moves to see the CEO (myself), CFO, and controller removed from the company. He also fired everyone on the board of directors other than himself. It was pretty clear to me he was carving a path to get to the cash. After my departure, I had my lawyer fight to see the books, something I should have certainly been entitled to given my history and the amount of shares I held. Robertson pushed back, and to this day I have not been allowed to review the books.
“2. A few years back, Linspire had a 5-man independent board, with three of the board members being outside of the company. Today, Michael Robertson is the only board member. So, if you’re looking for ‘the board’ to be responsible, you’re banking on the ethics of this one man.”
Carmony predicts Linspire stockholders will be “given a handful of Xandros stock. The cash will magically be gone.”
He also has “a feeling it will take a lawsuit to sort all this out. Where is all the cash Robertson? Did you take it, squander it, or use some legal maneuver to get it and leave the shareholders with nothing?”
Despite Xandros’ claims that Xandros will continue the Linspire and Freespire distros – Linspire 6.0 incorporated Microsoft and other proprietary technologies to further its push on the desktop – it’s probably safe to kiss them good-bye. The Canadian company will retain Linspire’s distribution-agnostic CNR.com “Click ‘N Run” digital download and software management service for itself.
With the acquisition Xandros CEO Andy Typaldos has been telling the press, “Xandros is already the third-largest Linux company in the world, and that we may already be the largest private Linux company in the world.” Asus bundles the Xandros distribution with its cheap Eee PC.
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