CNET también está disponible en español.

Ir a español

Don't show this again

Tech Industry

Red Hat meets estimates

The top seller of the Linux operating system becomes profitable by some measurements while meeting analyst expectations for the most recent quarter.

Red Hat, the top seller of the Linux operating system, became profitable by some measurements while meeting analyst expectations for the most recent quarter.

Adjusting for various one-time costs, Red Hat had a net income of $600,000 for break-even earnings per share, the result expected by analysts surveyed by First Call.

Excluding those adjustments, though, the company had a net loss of $27.6 million, or 16 cents per share, compared with a net loss of $17.4 million in the year-ago quarter, the company said in a statement.

Red Hat had revenue of $25.6 million for its fiscal 2002 first quarter, ended May 31, an 18 percent increase from the $21.7 million of the same quarter a year earlier. However, the revenue was a 5 percent decrease from the quarter ended Feb. 28.

"In a difficult information technology environment, Red Hat delivered a profit and generated positive cash flows for the first time," Chief Executive Matthew Szulik said in the statement.

The Durham, N.C., seller of Linux software and services is facing a fusillade of criticism regarding the shared open-source development of Linux and much of the resulting software. But Linux continues to make more inroads at companies such as IBM and Compaq Computer, and research firm IDC and Gartner recently ranked Red Hat as the top Linux seller.

The $25.6 million in revenue for the quarter was about 7 percent lower than the $27 million the company had told analysts it expected, Chief Financial Officer Kevin Thompson said. The company compensated by way of cost-cutting measures, including swift action to lay off redundant personnel resulting from the February acquisition of consulting company Planning Technologies.

Red Hat has more than 600 employees. The company doesn't expect that number to change significantly in the current quarter, executives said.

Red Hat had to write off $4 million worth of investments in smaller companies, Thompson said. Other nonrecurring charges in the quarter included $3.7 million in merger and acquisition costs, $3.7 million in stock-based compensation costs and $20.8 million in amortization of goodwill and intangibles.

Red Hat said its effort to gain customers among large corporations--an effort under way for years--has begun taking hold. Among new customers are Nortel Networks and Cisco Systems, both of which will use Red Hat Linux systems for developing software to run on their networking hardware.

Nortel will use thousands of Red Hat workstations, while Cisco will pay for use of the Red Hat Network, by way of which Red Hat can manage computers remotely. In addition, Thrifty Car Rental signed a deal to use Red Hat software for database configuration and reporting systems, Red Hat said.

Red Hat's two main competitors are Sun Microsystems and Microsoft.