Red Hat Gets A Break, Finally

CONTRIBUTOR Douglas A. McIntyre http://247wallst.blogspot.com:

After being pounded in the market when its Linux solution was left out of Microsoft's (Nasdaq: MSFT) alliance with alternative Linux shop Novell (Nasdaq: NOVL), Red Hat (Nasdaq: RHAT) has finally gotten a break. Nokia (NYSE: NOK) has chosen Red Hat's Linux software system for it network server platforms.

While Red Hat has more market share in the Linus OS business than Novell, the deal, with its huge marketing support, boosted a flagging Novell.

Red Hat's stock has fallen from $32 in May to its current price of under $17. But, the stock may have run too far, too fast before that. It stood at under $11 in May 2005, so it had tripled in a year.

Wall St. should not forget that Red Hat is nicely profitable, and growing. In the last reported quarter ending August 31, the company did just shy of $100 million, and had an operating profit of over $9 million. Revenue had gone up each of the three immediate quarters.

Novell's deal with Microsoft may put it too close to the huge software company that many enterprise customers do not trust. Microsoft has made "land grabs" in the past, and companies like Nokia may elect to use Red Hat over the rival "Novell brought to you by Microsoft" Linux solution.

For Red Hat, not all the news is bad.

http://247wallst.blogspot.com

You May Also Be Interested In

• Microsoft Invests $1.5 Billion in Abu Dhabi's G42 to Accelerate AI Development and Global Expansion
• Israel defense minister to Pentagon: No choice but to retaliate against Iran - Axios
• Microsoft invests $1.5 bln in Abu Dhabi AI firm G42, takes board seat