Feeds

Red Hat grapples with Wall St over JBoss

Not a good Q2

Build a business case: developing custom apps

Red Hat was grilled by Wall Street today on plans its for JBoss after profits took a nose-dive in Q2.

Chief executive Matthew Szulik fielded question after question on finances, business and technical tactics for the recently acquired company by an analyst crowd clearly trying to figure out its impact on Red Hat.

Analysts were up in arms after Red Hat reported a 74 per cent increase in expenses and a 33 per cent drop in net income, as JBoss's operations were assimilated during the quarter and Red Hat sales people were taken off the front line to train them in selling JBoss.

Red Hat also underperformed on earnings, leading one analyst to ask whether Red Hat had factored in assimilation of JBoss before making its Q2 forecast.

Szulik rallied by painting a rosy picture of the market for combined JBoss and Red Hat services - such as the Red Hat Application Stack launched last week. The plan appears to be: get existing Red Hat customers onto JBoss subscriptions and then expand.

That means selling Red Hat and the combined JBoss application server, business rules engine and enterprise service bus (ESB) to users outside of JBoss' traditional developer-centric customer base.

"Every customer I visited this quarter is running JBoss," Szulik said. "Once we establish the technical capability and referencibility that provides the short term ability to monetize them, we will move into production environments, business processing and rules environments."

Szulik continued that the combination of JBoss and Red Hat Enterprise Linux (RHEL) 5.0, due in the first quarter of 2007, would also help Red Hat's network of partners. The stack, Szulik said, will deliver a low-cost, high-value platform for the channel, noting JBoss had no channel presence in markets where Red Hat is strong.

On the drawing board is a Fedora-style project for JBoss, headed by Marc Fleury, general manager of the JBoss division . "Marc Fleury is going through the pros and cons on that," Szulik said. "I don't think it would work any differently to the RHEL subscription model."

In Q2 Red Hat net income fell a third to $11m while earnings per diluted share dropped four cents to $0.05 on revenue that increased 51 per cent to $99.6m. Operating expenses came in at $73.8m, an increase of 74.8 per cent. Wall St had expected expected $97.1m revenue and ten cents per share earnings.

JBoss contributed $7m to the second quarter and - Red Hat said - is on track to reach its target of between $22m and $23m net income for the full fiscal year.®

The essential guide to IT transformation

More from The Register

next story
Microsoft exits climate denier lobby group
ALEC will have to do without Redmond, it seems
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
BYOD's dark side: Data protection
An endpoint data protection solution that adds value to the user and the organization so it can protect itself from data loss as well as leverage corporate data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?