Red Hat suffers $55.3m loss

The red ink continues for Linux market leader Red Hat, which has reported net losses of $55.3m (£38m) for the second fiscal...

The red ink continues for Linux market leader Red Hat, which has reported net losses of $55.3m (£38m) for the second fiscal quarter that ended on 31 August.

That compares with a net loss of $27.6m for the first fiscal quarter of 2002 that ended on 31May.

The US-based company said in a statement that the losses were reduced on paper to just $100,000 after taking into account a restructuring charge of $37.2m and other adjustments.

That $100,000 adjusted net loss compares with an adjusted net loss of $4m for the same period one year ago.

The restructuring charge of $37.2m includes $33.8m in goodwill and intangibles related to acquisitions made in prior periods, and $3.4m in severance-related expenses.

Red Hat reported revenue of $21.1m for the quarter, which is down 15% from revenue of $25m one year ago. It is also down by 17% from the first quarter of fiscal 2002, when revenue was $25.6m.

Yesterday's news comes after Red Hat reported a $600,000 profit for its first quarter on an adjusted basis for the first time in its history.

Matthew Szulik, Red Hat's chief executive officer, said the company is shifting its focus from retail box sales of its open source operating system to developing closer ties with its business customers. "It's a transition from sales and marketing to a more integrated relationship with customers," he said.

Red Hat will now direct its sales and support efforts at business customers looking at Unix to Linux migration opportunities and toward a promising and developing market in embedded systems, he said.

The company will also have announcements in the next 60 days for new products sought by enterprise customers, including entries in the security market and the high-availability market, said Szulik.

Red Hat is taking the right approach by emphasising its opportunities in the embedded systems market, said Bill Claybrook, an analyst at Aberdeen Group.

"They really have acknowledged that they hadn't done a good job with their embedded systems," he said. "They had sort of been lagging behind."

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