Feeds

Red Hat deflates Wall St expectations

Fails to show us the money

Boost IT visibility and business value

Wall St Linux darling Red Hat was down in after hours trading Thursday after reporting a sharp drop in income on sales that grew less than expected for the fourth quarter.

Shares fell by almost two percent to $23.14 after the vendor reported a 25 per cent drop in total income to $21m for the period ended February 28, on revenue that increased 41 per cent to $111m. Earnings per diluted share fell three cents to $0.13. Red Hat missed analysts' revenue estimates of $112.6m.

Red Hat pointed to its training and services business, which grew 26 per cent to $15.2m, as one area of weakness, citing the fact that Christmas and New Year fell on work days. Chief financial officer Charlie Peters claimed Red Hat lost "two full weeks" of training revenue. Stock compensation and tax expenses were blamed for the earnings hit.

For the year, Red Hat saw income drop 24 per cent to $59m with revenue up 43 per cent to $400.6m. EPS increased fifteen cents to $0.29.

It was a tough year for Red Hat, as Oracle announced its own Linux support network for Red Hat customers, and Linux rival Novell teamed with Microsoft on sales and technology integration.

Red Hat seems to have overcome early concerns of an initial drop off in business, but that didn't mean analysts were entirely at ease. Overall subscriptions were up for both the quarter and year. Subscription revenue grew 43 per cent to $95.9m for the fourth quarter and 48 per cent for the year to $341m.

Executives, though, were probed during the quarterly analysts' conference call on length of contracts and renewal rates, the planned Red Hat desktop - due in May - and when revenue from the Red Hat Exchange partner network, announced earlier this month, will start to kick in.®

Boost IT visibility and business value

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
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.
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.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.