Red Hat Downgraded, Trouble With JBoss

Red Hat (RHT) shares are lower Thursday after Bank of America analyst Kirk Materne cut his rating on the stock to Neutral from Buy. His price target goes to $21 from $23.

Materne says the company’s fiscal third quarter ended November should be “solid,” but that its JBoss application server software “continues to have trouble gaining momentum.” He adds that there are “few catalysts on the horizon” that could add to current billings and cash flow growth estimates for the fiscal year ending in February 2008, or for that matter, FY 2009.

Meanwhile, Trip Chowdhry, of Global Equities Research, also downgraded the stock today, moving to Equal Weight. Chowdhry contends that the company’s business fundamentals are “deteriorating,” and that the JBos acquisition “is a complete failure.”

Chowdrhy also asserts that Red Hat Linux “is gradually being relegated to a position of non-criticality.” He also says Red Hat is losing momentum in the BRIC countries - Brazil, Russia, India and China - to Microsoft (MSFT) and Oracle (ORCL). And he says hardware vendors (IBM)and Hewlett-Packard (HPQ) are providing support and bug fixes for Red Hat Linux since “vendors feel Red Hat support is not enterprise class.”

Not least, he says that developer momentum is shifting away from the Open Source LAMP software stack - Linux, Apache, My SQL, PHP - and toward Microsoft’s .Net platform.

Red Hat closed Thursday down 30 cents, at $19.03.

Comments

[Brian Croner]

Born to program or not to program. Dependent on capital to develop software is not a programmer. .NET captures these non-programmers and lets themselves go around and tell people they are programmers. Unless you can develop on a text pad for Linux Apache MySQL/PostgreSQL PHP/Perl, don't bother calling yourself a programmer. You are a GUI environment operator, and a slave to capital at that. Microsoft is still an inferior operating system to Linux. Programming is still hard to learn. Above I see the shift of development activities away from open source toward capital drive. This means that most developers could never code their way out a paper bag. Without stealing their source, or automatically generating it from a GUI, they can't do the job. This is why they have to be paid to do their thievery. Apparently, less people can make the jump into open source than I would have thought. If you can't program, you can't program, and there's more money in stealing software that runs in a capitalist environment than software that runs under a truly free paradigm.

I retired from development. I'm more of a mathematician than a software developer now. Maybe less people are out to steal my software because I just don't write enough for them to steal anymore.

[Mac Alister]

I found it surprising to read the above tendencies while for instance JBoss products are downloaded by tens of thousands, books around JBoss application server, Seam framework are published in numbers (and not by Red Hat ;) ).

Of course this is no cash figures but in my opinion it shows a very large users and developers base which seams to be greatly underestimated by the above analysis. It is definitely not easy to express open source based market shares.

The company I work at in Health field uses open source softwares for 100% of servers operating system, 75% of desktops operating systems and for nearly all softwares (moved from MS Office suite to OpenOffice) but none of the open source figures have any chance to end in the above analyst hands !