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| Friday, December 22, 2006 |
Shares of Red Hat Inc.(NASDAQ RHAT) surged in premarket trading Friday after the maker of computer operating systems reported third-quarter earnings showing the company survived the first phase of attack from Oracle Corp.
Red Hat posted third-quarter adjusted profit, excluding charges, of 14 cents per share, beating forecasts for profit of 12 cents per share. The Raleigh, N.C.-based maker of Linux operating systems said revenue rose 45 percent to $105.8 million.
Some analysts said the quarter was surprisingly strong but it's too early to declare the Oracle threat over. Red Hat's shares lost a quarter of their value in October after business software maker Oracle in October said it would sell maintenance services for Red Hat's Linux operating system and charge less than Red Hat.
Jefferies & Co. analyst Katherine Egbert in a client note called the report "cheerful," but said "it's too early to gauge the full effect of competition from Oracle" as well as Microsoft Corp.'s support of Novell Inc.'s version of Linux.
Still, the "breakout quarter should help allay investor concerns," Merrill Lynch analyst Kash Rangan wrote in a research report. The competitive threats from Oracle and Microsoft may be exaggerated, Rangan said, as Red Hat lost only a few customers in the first five weeks of competition.
"Oracle's Linux push is validating the market and expanding the pie, which is driving more business for Red Hat," Rangan said.
Shares of Red Hat rose $2.71, or 15 percent, to $20.67 in trading on the NASDAQ. |
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