Linux software maker Red Hat reported a break-even quarter in terms
of adjusted earnings per share as revenue slipped 15% from the same
quarter a year ago.
The maker of the Red Hat Linux open source operating system lost
$100,000 (£68,000), with flat earnings per share in the fiscal
second quarter, which ended on 31 August, after adjusting for
one-off charges. In last year's fiscal second quarter, Red Hat
reported a loss of $4m (£2.71m), or two cents per share, excluding
charges.
The second-quarter figures represent the third consecutive quarter
Red Hat has reported at least a break-even quarter, the company
said. "That's pretty incredible when everyone else is running
around in the red," said Matthew J. Szulik, Red Hat's president and
chief executive officer.
Red Hat matched analysts' estimates calling for break-even earnings
per share, according to a poll by Thomson Financial/First Call,
which forecasts earnings per share excluding charges.
Including charges and other one-time costs, Red Hat said it lost
$55.3m - or 33 cents per share - in the second quarter of this
fiscal year, compared with a loss of $20m - or 12 cents per share -
in the same quarter a year ago.
Those charges included a restructuring cost of $37.2m, to account
for $33.8m in costs related to acquisitions made in prior periods,
and $3.4m in severance-related expenses. During the quarter, Red
Hat said it restructured its operations to focus on two primary
areas: migrating customers from the Unix operating system to Linux
and fortifying its products in the embedded system market.
The company announced several new customers that will use Red Hat
services to migrate to Linux, including financial services company
Morgan Stanley Dean Witter Online. Retailing giant Amazon, a
long-standing Red Hat customer, has also increased its deployment
of Linux with Red Hat products.
"These enterprise successes validate the large market opportunities
we are pursuing," Szulik said following the earnings release.
Total revenue for the second quarter was $21.1m, down 15% compared
to $25m in the same quarter last year. A significant portion of
that revenue came from overseas sales of embedded operating systems
to device manufacturers.
International sales contributed roughly 33% to fiscal
second-quarter revenue, up from 29% in the first fiscal quarter of
2001, the company said. The Japanese, Korean and Chinese markets
showed the biggest gains during the quarter, offsetting some of the
declines in the US where weak performance in the semiconductor
sector lowered embedded systems revenue, according to Kevin
Thompson, Red Hat's chief financial officer.
The company offered only general guidance for the current and
upcoming quarters. "We expect revenue growth to be moderate, but we
continue to plan on being break-even to profitable on an adjusted
earnings per share basis going forward," Szulik said.