A company that helps computer owners break away from Microsoft, VA Linux Systems Inc., became the stock market's latest bottle rocket yesterday, with share prices shooting up nearly sevenfold on the first day of trading.

The Sunnyvale, Calif.-based company sells computers that run the increasingly popular Linux operating system, an alternative to Microsoft's Windows that is making the transition from cult status to mainstream business acceptance. The 4.4 million shares were offered at $30 each and closed yesterday at $239.25, giving the company a market value of nearly $9.5 billion in what has been called the biggest first-day gain in history.

Linux is an operating system that is available for free on the Internet. The bare-bones program was written by Finnish programmer Linus Torvalds, and it has been refined and improved in the years since by developers all around the world who work on the project gratis as a labor of geek love. It is the most prominent "open source" software--that is, the code that makes it work is in plain sight, available for fixing, tinkering and evolving by anyone willing to wade in. That's markedly different from most commercial software, which keeps source code as a trade secret and keeps it hidden.

In his judicial finding that Microsoft Corp. is a monopoly, U.S. District Judge Thomas Penfield Jackson mentioned Linux as one of the "fringe operating systems" that consumers could install instead of Windows, but said, "By itself, Linux's open-source development model shows no signs of liberating that operating system from the cycle of consumer preferences and developer incentives that, when fueled by Windows' enormous reservoir of applications, prevents non-Microsoft operating systems from competing."

Investors seem to feel differently, however.

The eager reception for VA Linux is part of a recent voracious market for all Linux-related stocks as Microsoft-haters and Linux lovers--oh, wait, that's often redundant--put their money where their heart is. Red Hat Inc., a Durham, N.C.-based distributor of Linux, saw its shares more than triple on the first day of trading, Aug. 11. Since then, it has risen 20-fold, closing yesterday at $286.25.

Andover.net Inc., a company that numbers Linux-oriented Web sites among its online properties, went public Wednesday and saw its share price more than triple as well. The stock jumped another $12.62 1/2 yesterday to $76 per share. Even Corel, a software maker that had been in the dumps before it added a version of Linux to its product line, has ridden the wave: Its stock has jumped more than ninefold since the October debut of its Linux product, and Corel shares rose by nearly 40 percent yesterday alone to close at $39.25.

"Anything that has Linux in its name or is even closely associated with it, in the same family, is going to be over the top," said Gail Bronson, a Silicon Valley start-up strategist and analyst for IPO Monitor, an information service. "Linux is, although it represents a small percentage of the [operating system] market right now, the only alternative to the behemoth in Redmond." That would be Redmond, Wash., home of Mircrosoft.

While she understands the surge, Bronson said she finds it over-optimistic, since the prospect that Linux will somehow topple Windows "remains to be seen or is, frankly, doubtful."

"It simply provides emotional comfort that there is an alternative," she said.

VA Linux chief executive Larry M. Augustin's more than 6.6 million shares were worth $2.1 billion at yesterday's high-water mark; by the end of the day they were worth $1.58 billion. No one at the company would comment, citing the "quiet period" rules imposed by the Securities and Exchange Commission.

In an attempt to give back something to the community of hackers who have built Linux over the years, VA Linux (like Red Hat before it) offered shares of stock at insider prices to people who had been involved in creating Linux over the years. Most were offered 100 shares--at yesterday's closing price, enough to pay for an Audi A4 or, with strong haggling, a BMW 325i.

Don Becker, the chief technology officer of Columbia, Md.-based Scyld Computing Corp. and a respected workhorse of the Linux community, said he took the company up on its offer of shares. Becker said he'll make no quick killing on his stock, planning to hold it for the long term--but dryly commented that he is "a little better off today than I was yesterday."

CAPTION: Finnish programmer Linus Torvalds wrote the Linux program.


(This graphic was not available)