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Recession? What Recession? Red Hat Continues to Grow

Red Hat Grows, Rival Novell Struggles

  • March 24, 2010
  • By Sean Michael Kerner
Sean Michael Kerner

For many in the IT world, the last twelve months are likely ones that they'd rather forget as companies laid off employees and struggled to deal with the ravages of the recession. But for Linux vendor Red Hat (NYSE:RHT), the past year has been a pretty good one financially: Red Hat is set to report its fourth-quarter fiscal 2010 revenues after the market close today and the forecast is positive.

For the quarter ending Feb. 28, Wall Street analysts project earnings of $0.16 per share, according to Thomson Reuters. During the company's third quarter fiscal 2010 analyst call, Red Hat executives' own earlier guidance provided revenue projections in the $191-$193 million range.

Red Hat has been showing sales growth every quarter so far during its fiscal year. In its first quarter of fiscal 2010, ended May 31, 2009, Red Hat reported an 11 percent year-over-year increase in revenues. Next quarter, a similar story: Year-over-year revenue growth of 12 percent. Next quarter: Red Hat blew out expectations with 18 percent year-over-year revenue growth and before-charges earnings of $0.17 per share, a penny ahead of Wall Street consensus.

Red Hat's positive growth in 2010 is in start contrast to the struggling year that rival Linux vendor Novell has been experiencing. In its most recent financial report, Novell saw declining revenue, though in one bright spot, its Linux business is on the upswing and finally broke even.

Wall Street will also be watching how one crucial development in particular is affecting Red Hat. The overall market landscape is shifting as Oracle now owns Sun's Solaris operating system, which is a rival to Red Hat's Enterprise Linux. Oracle (NASDAQ: ORCL) also offers its own version of Linux based on Red Hat's distribution.

Virtualization, cloud computing payoffs

Investors will also be looking to see the fruits of Red Hat's recent efforts. The company has been busy over the last three months expanding on its virtualization and cloud initiatives and announcing a number of big wins. The cloud in particular has been a major area of investment for Red Hat, with multiple open source efforts underway to help enable cloud deployments.

Among the recent wins announced by Red Hat is one to help provision virtualization technology for IBM's new Cloud effort.

On the core platform side, Red Hat this week said it's been selected by the Tokyo Stock Exchange as part of a new trading system. Red Hat is no stranger to stock market customers and currently powers the New York Stock Exchange (NYSE) .

Red Hat has also been busily enhancing its middleware. This week, Red Hat announced updates to its SOA, Enterprise Web Platform 5.0 and JBoss Developer Studio (JBDS) 3.0 products .

 

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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