Red Hat Gains on Management's Q4 Forecast

On a conference call with analysts last night following a better-than-expected Q3 report, Linux operating system vendor Red Hat (RHT) management forecast revenue that was slightly below expectations, but a profit range for Q4 that was right in line.

Red Hat sees Q4 sales of $166 million to $167.5 million, below the $171.6 millon that analysts have been looking for, and 19 cents to 20 cents a share in profit, which is right in line with analysts’ 19-cent estimate. Management, however, was at pains to emphasize foreign exchange rates, noting that the company lost about $7 million last quarter because of the rise of the dollar against numerous other currencies. Management insisted that $171.6 million was probably not fully baked in analysts’ models given what it called “significant” foreign exchange rate fluctuations still ongoing.

“It is apparent to me by reviewing First Call that at this point most sell-side analysts have not adjusted for foreign currency their estimates for Q4 or their estimates for the coming year, so I would assume that they will all do that,” said Charlie Peters, Red Hat’s CFO.

Well, investors are giving Red Hat the benefit of foreign exchange and a lot else Tuesday, driving up the shares $1.68, or 14%, to $13.65.