Red Hat Earnings Rise 59%

Shares of Red Hat climbed 4.6% to $19.76 AH Tuesday after the provider of Linux open source operating systems reported a 59% jump in fiscal second-quarter earnings and sales that came in above expectations. Red Hat said it earned $19.1M ($0.09/share) up from $11M ($0.05/share) in the same period a year earlier as revenue rose to $127.3M from $99.7M. Subscription revenue climbed 29% to $109.2M. Excluding items, earnings were $36.9M ($0.17/share) compared to $24.5M ($0.12/share) a year ago. Analysts, on average, had expected earnings of $0.17/share on revenue of $125.1M. Bookings as of the second quarter were 27%, according Red Hat, which noted that the pipeline for contracts for its JBoss middleware line is the highest since its acquisition in 2006. Looking ahead, the Company said it expects to earn $0.18/share, excluding items, on revenue of between $131M and $133M in the fiscal third-quarter, in line with analysts' estimates for earnings of $0.18/share and revenue of $132M. "We are increasingly moving our sales and distribution strategy from... a product-based approach to a much more integrated consulting approach, where we are involved with line of business executives as well as their technical teams, that allow us to be involved much earlier in the selling process and the system design and development process... The size of the orders... and the recurring nature of that relationship with the customer is much more positive, I believe, for both JBoss and Red Hat long term," CEO Matthew Szulik said during the company's earnings conference call (full transcript).

Sources: Press release, TheStreet.com, MarketWatch
Commentary: Red Hat Struggles Through Transition To Multi-Product Company • Microsoft Closes Third Linux Deal: Is Red Hat Next?
Stocks/ETFs to watch: RHT. Competitors: NOVL, MSFT, JAVA

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