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Red Hat revenues in 20% climb

December 22, 2010 No Comments

Commercial Linux and middleware distributor Red Hat revealed its financial results for its third quarter of fiscal 2011, and if revenues are any guide, then the company just keeps growing like there never was a recession. That said, Red Hat’s profits are under a little pressure, thanks to product transitions, and Wall Street won’t be happy about that at all.

In the quarter ended November 30, Red Hat booked $235.6m in sales, up 21.2 per cent from the year ago period. Net income was up 58.5 per cent, to just over $26m, but the company is not really suddenly more profitable. Rather, in the year ago period, Red Hat had $8.75m in fees associated with its settling of a class action lawsuit dating from its restating financial results in fiscal 2002 and 2003 and in the first quarter of 2004. Ignoring the effect of that lawsuit, Red Hat’s net income only grew at 17.7 per cent by El Reg’s math.

That Red Hat’s profits were under pressure is no surprise, given that the third quarter saw the launch of its Enterprise Linux 6 operating system. Red Hat is generating cash and is positioning itself to be the go-to alternative to Microsoft Windows stack, various IBM platforms and WebSphere, and Oracle’s Solaris and RHEL clone, also called Enterprise Linux, and WebLogic for operating systems and middleware. And the company will very likely be able to wring more profits out of the RHEL 6 transition in the months and years ahead because as RHEL 6 explained in detail in the wake of the launch of the OS in mid-November, support for the new OS costs more than for RHEL 5. Sometimes a lot more.

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