Red Hat beats profit, sales estimates

CIOL Bureau
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SEATTLE, USA: Red Hat Inc beat Wall Street's profit and sales forecasts on Wednesday, sending positive signals that technology spending may be on the rebound and helping its shares up more than 3 per cent after hours.


The world's biggest provider of Linux software, whose rivals for corporate customers include Novell Inc and Microsoft Corp, has been weathering the recession well as the popularity of open-source software grows and it sells most of its products via subscriptions that lock in customers over multiple years.

"In general I'm hearing very positive things from the CEOs of most of the open-source companies," Red Hat chief executive Jim Whitehurst said in a telephone interview.

"We are starting to see more discussion of new projects from customers for the first time in a long time," he said, on the subject of broad technology spending. "I hope the worst is behind us."


Red Hat reported net profit for the fiscal second quarter ended Aug. 31 of $28.9 million, or 15 cents per share, compared with $21.1 million, or 10 cents per share, in the year-ago quarter.

Excluding a one-time $7.3 million tax benefit and certain other items, the company reported 16 cents per share profit. Wall Street was expecting 15 cents per share, on average.

Revenue rose 12 per cent to $183.6 million for the quarter, helped by sales of its subscriptions to maintenance contracts that provide upgrades, help-desk support and bug fixes for Linux software. That beat analysts' average forecast of $179.1 million, according to Reuters Estimates.


Red Hat's shares rose 3.3 per cent in after-hours trading to $25.70 after closing at $24.88 on the New York Stock Exchange.