| Red Hat has a great quarter; CEO leaves |
Dec. 21, 2007
Red Hat announced outstanding financial results for its third fiscal quarter, which ended Nov. 30. How outstanding? The Linux company's revenue for the quarter jumped to $135.4 million.
That is an increase of 28 percent from the equivalent 2006 quarter and 6 percent from the second quarter of this year. Drilling down, Red Hat Enterprise Linux subscriptions represented the bulk of Red Hat's income. The company's total RHEL income was $115.7 million. That brings RHEL's income up 30 percent year-over-year and 6 percent sequentially.
As Red Hat CEO Matthew Szulik said during the earning call, "Analyst reports keep saying that Windows is growing faster than Linux in the server space, but that's not what our market penetration is showing us. That's not CEO rhetoric. That's economic fact."
For Red Hat's share owners, the net income for the quarter came out to a healthy $20.3 million. That works out to a dime per diluted share. Last quarter saw 9 cents per diluted share and 7 cents per diluted share in the equivalent 2006 quarter. At the same time that Red Hat was making money, the company has also been saving money. Its total cash and equivalents at quarter's end was $1.3 billion.
Charles Peter, Red Hat's chief financial officer, said the company is looking for acquisition candidates with the cash. Red Hat also has a green light for a stock or bond buyback. However, in none of these cases was the company ready to announce any concrete plans.
Looking back at the quarter, Szulik spotlighted the introduction of Red Hat’s new channel partner program as being a major step forward. In particular, Szulik said that the company's middleware channel efforts, the JBoss Advanced Partner Program, have been doing well. The company now has more than 70 JBoss-specific channel partners. Szulik added that Red Hat had done an awful lot of work in building up JBoss' channel program.
He said several times during the press conference that virtualization, which is a highlight of Red Hat's newest Linux, RHEL 5.1, is quickly becoming an important part of Red Hat's revenue stream. Looking ahead, he sees Red Hat ideally placed to make the best of what he believes will be an unstoppable shift between today's primarily physical server-based IT centers and virtual ones.
Red Hat will be moving on, though, without Szulik at the helm. Szulik will be leaving the demanding dual job of CEO and president because of family health issues. Sources close to Red Hat indicate that his wife is quite ill.
In a Red Hat CEO blog entry, which has not been put up yet but was provided to Linux-Watch early, Szulik wrote, "I take pride when customers and industry types comment to me that the people of Red Hat are 'different.' Not like the cylons who have come to dominate the industry of technology. Through our actions, the open-source community and the people of Red Hat are defining a modern economic relationship between developer and customer. Collaboration, transparency, and value delivered."
—Steven J. Vaughan-Nichols
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