Linux distributor Red Hat reports 7 percent increase in profits

Linux distributor Red Hat reports 7 percent increase in profits

Raleigh-based commercial Linux distributor, Red Hat Inc. reported a 7 percent increase in its fiscal first-quarter profit, kicking an industry trend of declining earnings.

As per Red Hat's statement, the company's net income for the three months ended May 31 rose to $18.5 million, or 10 cents a share, from $17.3 million, or 8 cents a share in the same period a year earlier.

Red Hat's revenue rose by 11 percent, to $174.4 million, from $156.6 million in the previous year.

Excluding stock compensation and amortization expenses, operating margin of the company rose to 23.4 percent from 21.8 percent in the previous year.

Profitability has been improving since James Whitehurst joined Red Hat as its CEO last year.

Red Hat sells subscriptions to maintenance contracts that provide upgrades, help-desk support and bug fixes for Linux software.

Red Hat, whose rivals include Novell Inc. and Microsoft Corp. has faced the recession well partly because it sells its products via subscriptions that catch in investors over multiple years.

It is worth mentioning here that in the most recent quarter Microsoft's net income plunged 32 percent from a year earlier. Oracle Corp said that its profit fell 7 percent.

Speaking on the topic, Red Hat's cost-conscious CEO, Jim Whitehurst, said, "Red Hat's growth is driven in part by our ability to help enterprise customers save money in a challenging (information technology) spending environment."

Jim Whitehurst further informed that Red Hat's Linux operating system is taking share away from Sun Microsystems Inc's Solaris operating system and its JBoss middleware is winning customers away from Oracle.

In the recent trading shares of the company rose 2.5 percent to close at $20.13 on the New York Stock Exchange.

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