GOVERNMENT

FREMONT, CA -- VA Linux Systems Inc. announced it would exit the hardware business and reduce its staff by nearly 35 percent, or 153 jobs, under a restructuring plan that will focus the company's attention on applications based on the Linux operating system. VA Linux believes the new strategy would mean revenues would ''significantly decline'' as historically the company has generated a significant portion of its revenues from the sale of its computer hardware products. The company stated that the changes would reduce its operating expenses and the amount of cash it needs to finance its operations. VA Linux said that after the change that amount -- its cash burn rate -- would be about $8 million a quarter and decline from there. The company reported that it expects to take a $10 million cash charge for the restructuring including the staff cuts, closure of facilities and asset write-offs. VA Linux will continue to accept hardware orders until July 10, 2001, with the goal of completing all deliveries by the end of the fiscal year, July 28, 2001.