Tuesday, June 21, 2011

Red Hat, Inc. (NYSE: RHT): Q1 Earnings Preview 2012

Red Hat, Inc. (NYSE: RHT) is scheduled to release its fiscal first-quarter earnings after the closing bell on Wednesday, June 22, 2011. Analysts, on average, expect the company to report earnings of 22 cents per share on revenue of $253.58 million. In the year ago quarter, the company reported earnings of 18 cents per share on revenue of $209.14 million.

Red Hat, Inc., together with its subsidiaries, provides open source software solutions to enterprises worldwide. The Company employs an open source software development and licensing model that uses the collaborative input of an international community of contributors to develop and enhance software.

In the preceding fiscal fourth-quarter, the Raleigh, North Carolina based company's net income was  $33.5 million, or 17 cents per share, compared to $23.4 million, or 12 cents per share, in the year-ago quarter. On an adjusted basis, the company earned 22 cents in the fourth quarter. Revenue rose 25% to $244.80 million from $195.87 million in the same quarter last year.Analysts, on average, expected the company to report earnings of 22 cents per share on revenue of $235.98 million.

For the fiscal first-quarter, Red Hat expects earnings of 21 to 22 cents per share, with revenue of $252 million to $255 million. The annual forecast is for earnings of 94 to 96 cents per share and revenue of $1.05 billion to $1.07 billion. 

Red Hat specializes in "open-source" software, which is technically free since its source code is distributed freely on the Internet, but which companies such as Red Hat are able to profit from by selling licenses that include support services. Red Hat offers open source software that is often used to deploy cloud computing solutions.

The company has benefited from growing adoption of "cloud computing" technologies. Cloud computing refers to services that are streamed over the Internet, instead of requiring software that's installed directly onto a desktop or laptop computer. According to CEO Jim Whitehurst, the company is on track to reach $1 billion in revenue in the fiscal year, helped by that trend.

Information technology spending is on the rise as companies spend more freely after clamping down during the Great Recession. But Japan's earthquake and tsunami have raised fears about companies such as Red Hat that do a large amount of business in that country. In regulatory filings, Red Hat has described Japan as the only country, besides the United States, that is individually material to its results. Still, Red Hat makes most of its money from U.S. customers.

Red Hat remains focused on managing discretionary costs effectively while increasing investments simultaneously in growth areas such as middleware, virtualization and cloud computing. 

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