Red Hat posts strong fiscal year '08 earnings

First quarter behind new CEO Whitehurst also positive

Linux operating system and open source middleware vendor Red Hat last week reported more than 30 per cent growth in its total revenue and its critical subscription revenue for its fiscal year 2008.

Red Hat's fiscal year, which ended February 29, was highlighted by total revenue of US$523 million, an increase of 31 per cent over revenue posted in fiscal 2007. Its subscription revenue, which is amassed from support licenses, was US$449.8 million, a 32 per cent increase over 2007. Net income for the fiscal year was up 28 per cent, from US$59.9 million to US$76.7 million.

Red Hat CEO Jim Whitehurst, who joined the company in January, said his priorities in fiscal year 2009 would be continued penetration into the corporate data center using Red Hat middleware and the Linux operating system. He said the company would invest in staffing, technology development and partner recruitment.

The company's earnings report showed spending on research and development in 2008 was up 37 per cent over 2007, from US$71 million to 97.4 million.

Whitehurst said on the earnings call that Red Hat is well positioned despite current economic woes because the company helps drive costs out of IT infrastructure.

The fiscal fourth quarter was Whitehurst's first quarter as Red Hat CEO. Whitehurst said in January that 90 per cent of his job would focus on execution of Red Hat's established core Linux and data center platform strategies.

The company reported strong business growth around JBoss but did not provide numbers to define the progress. Last year, Wall Street was critical of Red Hat's growth with its JBoss business, which anchors its new middleware strategy.

Whitehurst said in January his plan is to take Red Hat from a company that posted less than US$500 million in revenue in 2007 to a billion-dollar revenue peak by 2011.

For the fiscal fourth quarter, which also ended February 29, total revenue was up 27 per cent over the same quarter a year ago to US$141.5 million.

The earnings aligned nearly perfectly with expectations of analysts polled by Thomson Financial, who projected revenue of US$141.1 million.

Subscription revenue for the fiscal fourth quarter was US$121.9 million, up 27 per cent over the same quarter a year ago and 5 per cent over fiscal 2008's third quarter.

In the quarter, net income was up just more than 8 per cent from US$20.3 million to US$22 million.

The company also announced that during the quarter it had repurchased approximately 3.7 million shares of its common stock for US$66 million.

Red Hat is planning to hold its fourth annual conference June 18-20 in the US.

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