Linux provider Red Hat (RHT) released third-quarter earnings late Tuesday, announcing that net income fell 32% as a result of higher expenses. One of those expenses was an $8.8 million charge that settled a lawsuit, cutting three cents per share from earnings in the process.

Taking these charges out of the equation, RHT would have earned $33.5 million, or 17 cents per share. While these results were a penny short of RHT's third-quarter earnings last year, they managed to top the consensus estimate by a penny. Revenue also beat analyst projections, coming in at $194.3 million when $165.3 million was expected.

Continue reading Red Hat's Earnings Fall on Higher Expenses

Red Hat's Earnings Fall on Higher Expenses originally appeared on BloggingStocks on Wed, 23 Dec 2009 10:30:00 EST. Please see our terms for use of feeds.

Red Hat (NYSE: RHT), a software business whose colleagues include Microsoft (NASDAQ: MSFT) and Oracle (NASDAQ: ORCL), reported Q2 numbers yesterday after the bell. Today, shares are up quite spectacularly. What's driving all the buying interest?

Well, the results were worthy of praise. Net sales increased 12%. Subscriptions were higher by 15%. Adjusted income, including the elimination of a tax benefit from the total, was 16 cents per share. According to Earnings.com, the market was looking for 15 cents per share. So, we've got the typical beat-by-a-proverbial-penny situation on our hands. I'd rather it be more than a penny, but I'll take it.

Continue reading Red Hat up big on Q2 numbers -- should you take profits?

Red Hat up big on Q2 numbers -- should you take profits? originally appeared on BloggingStocks on Thu, 24 Sep 2009 14:40:00 EST. Please see our terms for use of feeds.

It's far from easy selling enterprise software today. But some companies are finding ways to grow. Just look at Red Hat (NYSE: RHT), which is a leader in open source solutions.

The company's applications, which help to reduce costs and increase productivity, have shown lots of resilience during the recession. For example, according to Red Hat's latest earnings report, the top 25 deals that were up for renewal got renewed. Actually, theses customers increased the commitments by 120%.

Continue reading Red Hat sees green in the latest quarter

Red Hat sees green in the latest quarter originally appeared on BloggingStocks on Thu, 25 Jun 2009 13:00:00 EST. Please see our terms for use of feeds.

Minyanville Professor Adam Katz dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

I've said it before: the second quarter is going to be the inverse of the first. Expectations going in were simply too high.

What I find interesting is that Oracle (NASDAQ: ORCL), Red Hat (NYSE: RHT) and Research In Motion (NASDAQ: RIMM) have all taken down guidance due to the sluggishness they're starting to see in their businesses.

What the Street seems to be ignoring is that the dollar has been crushed for over a year now, which means that the currency tailwind is only getting weaker as the year drags on. If one uses $1.55 euro per dollar as a benchmark, the second-quarter effect was a 14% year-over-year currency tailwind.

In the third quarter, that drops to 10%; in the fourth, it will drop to 5%. Add in macroeconomic headwinds -- along with the fact that credit markets have been pushed back into a state of mild panic -- and it's a surefire recipe for a very tumultuous back half of the year.

I'm looking hard for reasons to be optimistic, but they seem to be thin on the ground. In the information technology (IT) sector, at least, we'll likely see a meaningful budget flush at the end of the year - if only because they'll be cut in a big way starting in 2009. This means that IT managers, if they even think they might need anything over the next year or so, need to use or lose whatever's left in their 2008 budgets come the fourth quarter.

This will create an environment where people will be calling the bottom for IT in the fourth quarter - but it's more likely to be the last hurrah before the bottom drops out.

Position in RHT

Techs -- you haven't seen the bottom yet originally appeared on BloggingStocks on Thu, 26 Jun 2008 17:30:00 EST. Please see our terms for use of feeds.

Red Hat (NYSE: RHT) provides customers with the Linux open source computer operating system. It also provides a variety of compatible technical programs, software development tools, support services and training programs. Microsoft (NASDAQ: MSFT), with its Windows operating system, is Red Hat's chief competitor. The firm operates strategic alliances with Intel (NASDAQ: INTC) and Advanced Micro Devices (NASDAQ: AMD).

Red Hat pleased investors earlier in the month, when it reported fiscal Q3 EPS of 19 cents and revenues of $135.4 million. Analysts had been expecting 18 cents and $132.4 million. A sharp jump in subscriptions more than offset increased operating expenses. Management also provided strong guidance for Q4/FY08 and announced that former Delta Airlines (NYSE: DAL) COO James Whitehurst would take over as CEO on January 1. RHT shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the shares with one "strong buy", six "buys," fourteen "holds" and one "sell." Analysts see a 23% average annual growth rate, through the next five years. The RHT Price to Book ratio (4.27), Price to Free Cash Flow ratio (26.28), Sales Growth rate (27.98%) and EPS Growth rate (171.43%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 95% of the outstanding shares. The stock is one of those used to calculate the AMEX Internet Index. Over the past 52 weeks, it has traded between $18.04 and $25.25. A stop-loss of $18.15 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

Red Hat (RHT) in bullish 'flag' pattern originally appeared on BloggingStocks on Mon, 31 Dec 2007 13:15:00 EST. Please see our terms for use of feeds.

Red Hat (RHT) soars on Q3 earnings originally appeared on BloggingStocks on Fri, 21 Dec 2007 11:50:00 EST. Please see our terms for use of feeds.

LDK Solar (NYSE: LDK) is up 16% on news of a new contract with Q-Cells.

Novavax (NASDAQ: NVAX) is trading up 12% on a partnership with GE (NYSE: GE)'s healthcare group.

Hemispherx Biopharma (AMEX: HEB) is off 20% on a terminated license agreement with Esteve.

Red Hat (NYSE: RHT) is moving down almost 4% on a downgrade from Jefferies & Co.

Stocks may trade differently in the pre-market than they do in the regular session.

Douglas A. McIntyre is an editor at 247wallst.com.

Pre-market movers originally appeared on BloggingStocks on Mon, 10 Dec 2007 08:27:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• JP Morgan downgraded Rockwell Automation Inc (NYSE: ROK) to Neutral from Overweight based on valuation, as the firm believes the recent credit market turbulence could make a material recapitalization less likely.
  
• Bear Stearns downgraded shares of Barclays (NYSE: BCS) to Underperform from Peer Perform on valuation and expectations for losses in the company's Capital division.
  
• Nollenberger downgraded shares of F5 Networks Inc (NASDAQ: FFIV) to Neutral from Buy, as they believe the company is transitioning from a "beat and raise" story to a "meet and maintain" story given the recent disruptions in the financial services sector and slowing growth in active web hosts on the net. The firm also downgraded shares of Foundry Networks Inc (NASDAQ: FDRY) to Neutral from Buy on valuation, seeing a well balanced risk/reward profile at current levels.
  
• Soleil downgraded shares of AMR Corporation (NYSE: AMR) to Hold from Buy to reflect the company's deteriorating revenue and non-fuel cost outlook.
  
• Red Hat Inc (NYSE: RHT) was downgraded to Neutral from Outperform at Credit Suisse, citing lack of progress in execution.

• LDK Solar (NYSE: LDK) was downgraded at CIBC to Sector Performer from Outperformer.
  
• Friedman Billings downgraded Parker Hannifin Corporation (NYSE: PH) to Market Perform from Outperform.
  
• Morgan Keegan downgraded Cree Inc (NASDAQ: CREE) to Market Perform from Outperform.

Analyst downgrades: ROK, BCS, FFIV, FDRY, AMR and RHT originally appeared on BloggingStocks on Mon, 24 Sep 2007 10:40:00 EST. Please see our terms for use of feeds.

The theory goes that Linux, the open-source operating system, will replace Windows as the preferred software to run servers. Over time, the cost advantage of software created by a community of developers would overwhelm the pricey Microsoft (NASDAQ: MSFT) product.

So much for theory. Windows is actually taking share from Linux in the server market. According to TheStreet.com "Microsoft picked up 2 percentage points, bringing its market share to 67.1% of servers shipped during the second quarter." Windows server revenue hit $5 billion in the second quarter compared to $1.8 billion for Linux.

The one operating system that did not do well in the last quarter was Unix, which is marketed by Sun (NASDAQ: JAVA) among others.

In some ways the figures are not a surprise, despite the cost advantage of Linux. The large enterprise marketers of the software, Novell (NASDAQ: NOVL) and Redhat (NASDAQ: RHT) have never become large companies.

Linux still operates under the threat of patent litigation. Microsoft has claimed that the open-source software violates several hundred of its patents.

Big enterprises shy away from products with potential IP problems, and that may be Microsoft's biggest weapon.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Microsoft (MSFT) beats back Linux originally appeared on BloggingStocks on Tue, 28 Aug 2007 07:00:00 EST. Please see our terms for use of feeds.

Computerworld.com has reported that Red Hat (NYSE: RHT) set the release for their newly unveiled Global Desktop for some time in June 2007. The operating system which was jointly developed with Intel Corp. (NASDAQ: INTC), appears to be aimed at small business and local government users with the additional undertones of a desire to be the enabling operating system of choice for developing industrial nations.

Red Hat CTO Brian Stevens indicates that the company seeks to provide an operating system that can be more closely tuned to the individual customers needs. He is quoted at OSDir.com as stating: "Users, requirements and technologies have changed so dramatically over the past few years that the traditional one-size-fits-all desktop paradigm is simply exhausted."

Red Hat sets Global Desktop release for June originally appeared on BloggingStocks on Fri, 18 May 2007 16:46:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Prudential started Visicu Inc (NASDAQ: EICU) with an Underweight rating and $7 target and said competitor substitute ICU modules, hesitant customers and patent challenges could impact future sales activity.

• RBC initiated Ciena Corp (NASDAQ: CIEN) with an Outperform rating and $33 target based on improving demand outlook driven by growth in video and data-traffic.

• W.R. Hambrecht initiated shares of Apple Inc (NASDAQ: AAPL) with a Buy rating and $110 target based on the company's impressive desktop and notebook offering that continues to grow faster than the industry and command higher ASPs, an iPod franchise that dominates the category and represented almost half of total company revenues in the strongest quarter in its history, December 2006, among other things.

• Deutsche Bank initiated Time Warner Cable (NYSE: TWC) with a Buy rating and $46 target. The firm is bullish on cable sector prospects and sees upside from consumer and commercial telecom services and growth in advanced video services.

• RBC started F5 Networks, Inc (NASDAQ: FFIV) with an Outperform rating and $90 target.

• Stanford initiated HealthSouth Corp (NYSE: HLS) with a Buy rating and $31 target.

• Kenexa Corp (NASDAQ: KNXA) was started at Jefferies with a Hold rating and $36 target.

• Stern Agee initiated Chico's FAS, Inc (NYSE: CHS) with a Buy rating and $26 target.

• JP Morgan initiated Red Hat, Inc (NYSE: RHT) with a Neutral rating.

Analyst initiations 3-09-07: Apple, Ciena and Red Hat initiated today originally appeared on BloggingStocks on Fri, 09 Mar 2007 11:34:00 EST. Please see our terms for use of feeds.

• Bear Stearns upgraded shares of Research in Motion Ltd. (NASDAQ:RIMM) to Outperform from Peer Perform, telling clients it sees further upside from new handset launches and continued expansion.
• First Albany upgraded shares of Micron Technology Inc. (NYSE:MU) to Buy from Neutral following the company's first-quarter report; the firm told clients that a weak first-half of 2007 has already priced into the shares but a strong second-half of 2007 has not.

• RBC Capital upgraded shares of Chipotle Mexican Grill Inc. (NYSE:CMG) to Outperform from Underperform, citing continued strong fundamentals and expectations that the company can meet or slightly beat first-quarter comp-store sales estimates.
• Red Hat Inc. (NYSE:RHT) was upgraded to Buy from Neutral at First Albany; the firm told clients that the company's Q3 report validates its thesis that the impact from Oracle Corp. (NASDAQ:ORCL) will be minimal, continued growth in RHEL deployments is likely, and pricing power is sustainable. Red hat was also upgraded by Citigroup to Hold from Sell and raised the target to $21 from $13.50.

Analyst upgrades 12-22-06: RIM, RedHat upgraded originally appeared on BloggingStocks on Fri, 22 Dec 2006 11:02:00 EST. Please see our terms for use of feeds.

Red Hat Inc. (NYSE:RHT) was supposed to be on its way out. The largest supplier of Linux open source products to corporations was going to be crushed by rival Novell Inc. (NASDAQ:NOVL) after it signed a deal with Microsoft Corp. (NASDAQ:MSFT) to jointly market Linux and Windows. Open source programmers were upset by the deal, but Microsoft is prepared to put up hundreds of millions of dollars to support it.

Well, perhaps large corporations that want open source operating systems also want to avoid a Microsoft-funded venture. Fox in the chicken house.

Red Hat revenue took off in the last quarter. Red Hat added 12,000 new customers in the quarter and revenue was up 45% to $108 million.

The stock, which fell to under $14 on the Novell/Microsoft tie up hit over $20 after hours.

Microsoft's attempt to move into the world of Linux is not looking very good now.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Rad Hat was supposed to be dead originally appeared on BloggingStocks on Fri, 22 Dec 2006 08:47:00 EST. Please see our terms for use of feeds.

Before the bell 12-21-06: End-of-year rally? originally appeared on BloggingStocks on Thu, 21 Dec 2006 07:39:00 EST. Please see our terms for use of feeds.

Sun Microsystems, Inc. (NASDAQ:SUNW) has decided to make its software platform, Java, open source, not unlike the Linux OS that is marketed by Novell and Red Hat, Inc. (NASDAQ:RHAT). Microsoft Corp. (NASDAQ:MSFT) recently teamed with Novell, Inc. (NASDAQ:NOVL) to distribute Windows with the Suse version of Linux.

Sun's argument for making Java open source is that it will be more attractive to customers and programmers. But, being free does not always drive adoption. There is a reason that Microsoft still owns the operating system business worldwide while Linux is free. Without a development path lead by one company, the software can be hard to manage.

One thing for certain is that the market does not care. Sun's stock was up 1% on the news. The stock has been trading in a narrow range just above $5 for the last two months.

Continue reading Sun's next move

Sun's next move originally appeared on BloggingStocks on Mon, 13 Nov 2006 14:18:00 EST. Please see our terms for use of feeds.

Microsoft Corp. (NASDAQ:MSFT) has not paid out this kind of money unless the company was settling a patent claim or antitrust judgment. The company is investing $400 million in its partnership with Novell [subscription required]. The partnership, announced last week, aims to get the Windows and Linux operating systems working nicely together on PCs.

MSFT will be paying for coupons so that corporate customers can get annual licenses to the Suse Linux operating system. It is, in essence, paying for the distribution of the open source software it has feared would take market share from Windows.

With Microsoft's new operating system, Vista, about to launch, supporting rival Linux would seem a queer thing to do.

Not necessarily. If Microsoft becomes the de facto largest reseller of Linux, it will have some measure of control over how fast the open source initiative can grow. Novell, Inc.'s (NASDAQ:NOVL) annual sales are under $1.2 billion, and its rival in the Linux market, RedHat, Inc. (NASDAQ:RHAT) has sales of well under $300 million.

Microsoft also got a promise from Novell that it would not sue Microsoft over Windows, presumably over any patent issues or monopoly practices.

And that, by itself, could be worth $400 million.

Douglas McIntyre is a partner at 24/7 Wall St.

Mr. Softy's big pocketbook -- $400 million on Novell partnership originally appeared on BloggingStocks on Wed, 08 Nov 2006 10:15:00 EST. Please see our terms for use of feeds.

Yesterday afternoon came a surprising announcement of partnership from two old-time rivals, Microsoft Corp. (NASDAQ:MSFT) and Novell, Inc. (NASDAQ:NOVL). The two said they would collaborate to build, market and support a series of new solutions to make Novell and Microsoft products work better together. That is, Linux Suse, the operating system distributed by Novell, would be able to work with Windows, Microsoft's operating system. Novell shares were up over 15% yesterday before the announcement on speculation/leaks.

Linux is a free open-source software platform, something Microsoft has been opposing for quite some time. In fact, Microsoft's very closed, almost paranoid approach to its proprietary software and code, as well as its dominance, probably caused the birth of Linux. In response to Microsoft's dominant position, programmers all around the world have developed a Unix-based operating system, collaborating and contributing to the system.

Continue reading Microsoft and Novell - who would have thought? Poor RHAT

Microsoft and Novell - who would have thought? Poor RHAT originally appeared on BloggingStocks on Fri, 03 Nov 2006 11:51:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY: Gap (GPS), Red Hat (RHAT) and Red Robin (RRGB) top today's extensive list of downgrades.

• Gap, Inc. (NYSE:GPS) was downgraded to Hold from Buy on valuation at Citigroup. The firm believes the 25% rally in the past two months had priced in much of the improvements at Gap.
• Red Hat, Inc. (NASDAQ:RHAT) was downgraded at Robert W. Baird to Neutral from Outperform following Microsoft Corp.'s (NASDAQ:MSFT) partnership announcement with Novell, Inc. (NASDAQ:NOVL).
• Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) was downgraded at four firms this morning: CIBC, Friedman Billings Ramsey, Bank of America and Bear Stearns. The downgrade was based on weakness in new markets and a reduction in earnings growth.

OTHER DOWNGRADES:

• Qualcomm, Inc. (NASDAQ:QCOM) was downgraded to Neutral from Buy at Oppenheimer, citing disappointing guidance and indications that the licensing dispute with Nokia (NOK) could extend several quarters.
• Needham downgraded Powerwave Technologies, Inc. (NASDAQ:PWAV) to Hold from Buy after their weak fourth quarter report.
• Norfolk Southern Corp. (NYSE:NSC) was downgraded at JP Morgan to Neutral from Overweight. The firm cited valuation and competitive pressures from CSX Corp (CSX).

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Analyst downgrades 11-3-06: Gap, Red Hat and a quad downgrade for Red Robin originally appeared on BloggingStocks on Fri, 03 Nov 2006 11:29:00 EST. Please see our terms for use of feeds.

They said it would never happen. Linux, the open source operating system, is the greatest enemy that Microsoft Corporation (NASDAQ: MSFT) faces in its attempt to keep its software franchise worldwide.

Today, Microsoft entered into a deal with Novell to distribute SuSe Linux, a version of the Linux software. Under the arrangement, both companies will promote the ability of computers to run Windows OS and SuSe Linux. Microsoft will also refrain from any attempt to get an IP judgement against any portion of the Linux software. Whether there are infringement issues is not known.

The obvious reason that Microsoft might do this is that its rival, Oracle Corp. (NASDAQ: ORCL), is promoting another version of Linux from Red Hat Inc. (NASDAQ: RHAT). Microsoft is simply flanking them.

But, there may be another reason. By promoting systems to run both Linux and Windows, it means that it is less likely that Windows will be excluded in place of the more economic Linux products. Microsoft may also be guarding against antitrust moves by Red Hat. It may seem perverse, but that's the Microsoft way.

Douglas McIntyre is a partner at 24/7 Wall St.

Microsoft And Linux: Keep your friends close and your enemies closer originally appeared on BloggingStocks on Thu, 02 Nov 2006 15:10:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY: Harrah's (HET), RedHat (RHAT) and General Motors (GM) top today's massive list of downgrades.

• The casino giant Harrah's Entertainment, Inc. (NYSE:HET) was downgraded by Stifel Nicolaus to Hold from Buy. The firm expects shares to be range-bound until the proposed buyout offer from Apollo Management and Texas Pacific Holdings is resolved. Stifel believes a deal will get done in the $5-$86 range, but it could take as long as 18-24 months.
• Red Hat, Inc. (NASDAQ:RHAT) was downgraded by several firms: to Neutral from Overweight at Credit Suisse, to Market Perform from Outperform at JMP Securities, to Neutral from Buy at Suntrust Robinson Humphrey and to Sell from Buy at Citigroup. The massive amount of downgrades followed Oracle's (ORCL) announcement to enter the Linux operating system market. Suntrust Robinson Humphrey believes that RedHat could end up being acquired by Oracle after a period of market cap erosion.
• General Motors Corp. (NYSE:GM) was downgraded to Neutral from Buy at Calyon Securities citing the lack of positive catalysts.

OTHER DOWNGRADES:

• RightNow Tech , Inc. (NASDAQ:RNOW) downgraded to Underperform from Sector Perform at RBC Capital Markets. The firm believes RightNow is in the middle of significant business model and accounting changes and prefers to avoid software companies in transition.
• Cablevision Systems Corp. (NYSE:CVC) was downgraded to Hold from Buy on valuation at Citigroup.
• UBS downgraded Murphy Oil Corp. (NYSE:MUR) to Reduce from Neutral after poor Q3 earnings and production guidance.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Analyst downgrades 10-26-06: Red Hat downgraded by four firms originally appeared on BloggingStocks on Thu, 26 Oct 2006 12:07:00 EST. Please see our terms for use of feeds.