RSSA buoyant Red Hat rides the economic waves
By Angela Gunn | Published December 22, 2008, 5:14 PM
Linux anchor Red Hat spent the past quarter coping with currency discomfort and taking advantage of tough times -- buying back its bonds and stock, and eventually kicking up its total revenue 22% above its numbers a year ago.
The company released its third-quarter 2009 earnings report this afternoon, and in the quarter ending November 30, reported $165.3 million in total revenue, which also represents a 1% increase over last quarter. Subscription revenues, at $135.5 million, were up 17% year-to-year and flat from Q2.
Net income for the quarter was up $4 million year-over-year, to $24.3 million, and share prices per diluted share were up 2 cents to 12 cents / diluted share. (Eleven million diluted shares -- around 6% -- were bought back during the quarter, producing a gain of $4.1 million.) Non-GAAP per-diluted-share price was $0.24, and non-GAAP adjusted net income was $48.4 million.
Operating cash flow weighed in at $59.1 million, down a bit from Q3 2008's $59.6 million but up from last quarter's $54.3 million. Currency inequities reduced quarterly revenues and expenses by (respectively) $6.9 million and $4.8 million -- an operating-income loss of $2.1 million.
I've been invested in Red Hat since the IPO, so this is welcome news for me.:)
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|Congrats. Just in time for xmas...
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|Wall Street was impressed with Red Hat's numbers, too, since IT is the first casualty in any company. Cash on hand is everything in these 'depressionary' times. Back in 2006, Simon Mink and Red Hat told the world it would stick with open source and it has. Vision tends to win over vagueness.
It has also been daring in its latest Fedora 10 release, contrary to Ubuntu's more conservative versions during '08. Back in October, Canonical said it could not continue losing money for much longer. (It hopes its server side comes to the rescue.) Meanwhile, Novell continues to lose money at record rates and needed another $150mn cash injection from Microsoft to stay afloat.
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|"since IT is the first casualty in any company."
Bull! Every company worth mentioning is cutting costs by means of IT, consolidating, streamlining process and cutting head count.
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|For the record? Red Hat spoke on their call of "judicious hiring," and said that their reasoning is that to have knowledgeable people in place for the expected upturn, you have to actually hire them and start training now.
Personally I really admire that line of thinking and wish I was hearing more of that from some of these companies. Too many investors of the dimmer sort are awfully impressed by hiring freezes and cuts, without thinking about how that affects the business long-term. Not saying that there aren't companies that could benefit vastly from rethinking their staffing -- we could sit here and name half a dozen even among just the ones I've written about this quarter! -- but simply "cutting head count" can be a failure in the medium-to-long term.
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|Mz. Gunn is completely correct. You may not have meant to come off sounding like the typical greenhorn junior exec but that's now it played in print. Bad IT decisions have cost at least as much money as good IT decisions have saved. I've personally been involved with two companies that were brought to the brink of collapse by problems that started as "streamlining" and "payroll reduction". In one case the problem was the direct result of poor planning by tech-ignorant managers telling engineers how to do their jobs. Automation that fails to simplify a process or IT that doesn't enhance you're workforce's capabilities are bad investments every time.
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|Complex subject and we are all making general statements...
What I do see in (relatively) healthy organizations is skimming the fat; Getting rid of huge outsourced development teams (where everybody is a sr. resource in a huge hierarchy after 2 years); Re-evaluating priorities and projects; Replacing quantity with quality.
I have slight concerns about the last point though with the market being simply flooded and knowing how certain finance departments work.
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|Stopping mismanaged projects? How wise! Who would have come up with that?!
The rest is as I said - I make a fortune of this situation. Take it or leave it.
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