Red Hat Reports First Profit On GAAP Basis

The Raleigh-based company said it earned $305,000, or break-even per share, for the three months ending Nov. 30, compared to a net loss of $15.1 million, or 7 cents per share, in the same period a year ago.

The results were in line with predictions of analysts surveyed by Thomson First Call.

Red Hat said it reported its fiscal third-quarter profit on the basis of generally accepted accounting practices; the company had provided figures on a pro-forma basis in past quarters.

In the fiscal second quarter, Red Hat lost $2 million, or 1 cent per share, on a GAAP basis.

Third-quarter revenues were $24.3 million, a 21 percent increase compared to $20.1 million during the year-ago period and 14 percent higher from the second quarter.

Red Hat said enterprise subscription revenues increased 29 percent during the quarter to $13.1 million. The number of subscriptions for its new Linux Advanced Server product increased by 50 percent to 12,000 units between the second and third quarter, company executives said.

"By continuing to deliver strong operating performance, Red Hat continues to show solid execution of its business strategy,' said Kevin Thompson, the company's chief financial officer.

Red Hat said it continues to see corporate clients migrating from the UNIX operating system to Linux networks. The Advanced Server product is touted as providing more open source application uses and technical services.

Pre-installing Red Hat products on Fujitsu computer hardware also are contributing to revenues, executives said. IBM also is reselling Red Hat Advanced Server to run across four lines of IBM servers and mainframes.

The earnings report was released after markets closed Tuesday. Red Hat shares rose 17 cents to close at $6.45 on the Nasdaq Stock Market. They fell 13 cents in extended trading.

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