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Gateway tries on Red Hat for size

Red Hat makes big moves at home and abroad, inking a server deal with Gateway and opening a new office to directly market the Linux operating system in Japan.

Gateway, a company best known for its home computer systems, is the latest company to join the Linux movement.

Gateway will install Red Hat's version of Linux on its own brand of servers, called ALR, when customers specifically request it, the companies said.

The step follows competitors Compaq, IBM, Hewlett-Packard, and Dell, all of which offer systems certified for Linux, a Unix-like operating system that is most popular on servers that make up computer networks.

These computing leaders have promised for several months that they would configure their own server models to work with Linux, but to date only Dell offers servers installed with the Linux operating system as a standard feature.

Red Hat stock soared to new heights today, up 23 percent to a new high of 108. Following today's run, the company claims a market capitalization of more than $7 billion.

Red Hat, the first Linux company to go public, has been a standard-bearer of the open-source movement. Two Wall Street firms began covering the company today, with Goldman Sachs analyst Richard Sherlund giving the stock a "market outperform" rating, while Hambrecht and Quist's Christopher Galvin placed a "buy" rating on Red Hat shares.

Jumping into Japan
Also today, Red Hat announced the opening of its new Japanese office, called Red Hat Japan, which will sell Red Hat software and services directly to the Japanese market.

Red Hat's decision to set up its own international office is a change of direction for the company, which previously had partnered with Itsutsubshi Research to develop and market Red Hat Linux for Japan.

"They had asked for more money than we wanted to pay," said Red Hat spokeswoman Melissa London. "We wanted to work together but realized wasn't going to work out. They wanted huge amounts of money."

Itsutsubishi's distribution will continue under the name Laser5, the company said.

Itsutsubishi also directed some harsh words at Red Hat, saying in a statement that Red Hat's management is "unstable" and that "it is hard, if not impossible for the companies located in the U.S. to control everything [and] to offer good support for customers in Japan."

With its overseas office, Red Hat is increasing the pressure on TurboLinux, currently the dominant distributor in Japan, according to market researchers.

The Japanese Red Hat office will be led by president Masanobu Hirano, who had been president of Hyperion Japan, a subsidiary of Hyperion Solutions.

International expansion was one of the goals of Red Hat's initial public offering, which raised the company $84 million in August.

Also today, security software maker V-One announced a Red Hat Linux version of its virtual private network (VPN) software, which allows a secure link to be set up over the Internet between two computers.