Linuxmaker MandrakeSoft in geldproblemen

Then, beginning in mid-1999, we entered the "technology bubble" whereby several venture capitalists invested in MandrakeSoft. Their requirement was that we would accelerate the development of the company while leaving its management to an experienced staff of world-class managers.

In May 2000, a new CEO and his management team joined MandrakeSoft. With this new management team, the company dramatically increased expenses (by 400%), hired many new employees, and entered into many expensive long-term agreements. Under this new management, the plan was to build the company into a worldwide leader in the area of e-learning, with only a link to Linux since the underlying platform and contents were open-source.

By March 2001, the results of this strategy showed a marked decrease in income, while expenses increased by 400%. At its worst point, MandrakeSoft's "burn rate" was approximately 1.5 ME/month ($1.5M/month). As a result, it was soon decided to remove this experienced management team and to refocus the company's activities strictly toward Linux.

Since April 2001, we have worked hard to converge quickly toward profitability by reducing expenses & increasing income. This has resulted in notable success as shown by the current financial results and positive trends. Reaching the "break-even" point is now planned for the next release of Mandrake Linux in the spring of 2003. Reaching the break-even point was initially planned to occur sooner *if* we generated enough financial resources (e.g. an increase of capital) to cut all of our expensive external contracts (these contracts had huge financial break-penalties).