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Red Hat eyes embedded arena for growth

Revenues up, loss down

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Leading Linux distributor Red Hat yesterday posted a much-narrowed second quarter loss, coming in just ahead of Wall Street expectations.

Red Hat lost $1.9 million (one cent a share) in the three months to 31 August, compared to $4.3 million (six cents a share) for the same period last year. First Call's analyst average had pegged Red Hat's lost at two cents a share.

Of course, that's the headline figure - Red Hat actually lost $15.7 million (ten cents a share), the difference coming from one-off acquisition-related charges (it bought embedded Linux specialist WireSpeed Communications back in June).

Indeed, Red Hat drew specific attention to its successes in the embedded arena, which is rapidly becoming flavour of the month in the world of Linux companies, replacing corporate services in the great 'this is way we'll make money' mantra.

Chipzilla, Samsung, Eastman Kodak, Hitachi, Ericsson, Cirrus Logic, Cradle Technologies and others all paid Red Hat between $100,000 and $1 million to help them get to grips with embedded Linux during the quarter, Red Hat CTO Tim Buckley noted during an analyst conference call.

He later told CNet that he will be detailing Red Hat's embedded strategy in two weeks' time, though broadly it will be based on selling service contracts and software upgrades, both on a contract basis rather than through royalties.

Red Hat's services business brought in some big-name customers, including support buyers Motorola, Fidelity Investments, Cisco and WorldCom, and training clients Qwest, Oracle, Cisco, Intel, IBM and Symantec.

Red Hat also noted it sold engineering support to AMD, presumably part of Chimpzilla's OS strategy for its upcoming 64-bit CPU Sledgehammer.

All of these contracts, plus others and Red Hat's Linux distribution business combined to generate revenues of $18.5 million for the quarter, up 76 per cent on last year's $10.5 million and 15 per cent higher than last quarter's $16 million. ®

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