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Red Hat Profit Falls, Misses Estimate


Red Hat Inc. (RHT), the world's largest seller of Linux software, said Monday after the markets closed that its second quarter profit fell from last year, as higher operating expenses more than offset a 15% increase in revenue.

The company's quarterly earnings per share, excluding items, also came in below analysts' expectations.

Charlie Peters, Executive Vice President and Chief Financial Officer of Red Hat, said, "This quarter marked a significant ramp-up in investments in our nascent storage business, with the launch in late June of Red Hat Storage Server 2.0. Furthermore, we announced two small technology acquisitions in the middleware space to further round out our offerings, which decreased the quarter's EPS by approximately $0.01 per share due to one-time closing costs."

Red Hat shares are currently losing 2.16% in after hours trading after closing the day's regular trading session at at $57.54, down 10 cents. The shares trade in a 52-week range of $37.85 to $62.75.

For the second quarter ended August 31, 2012, the Raleigh, North Carolina-based company reported net income of $35.0 million or $0.18 per share, compared to $40.0 million or $0.20 per share for the year ago quarter.

Excluding items, adjusted net income for the second quarter was $54.9 million or $0.28 per share, compared to $56.5 million or $0.29 per share in the prior year quarter.

On average, 29 analysts polled by Thomson Reuters expected the company to earn $0.29 per share for the second quarter. Analysts' estimates typically exclude special items.

Total revenue for the second quarter rose 15% to $322.60 million from $281.32 million in the same quarter last year. Twenty-seven analysts had a consensus revenue estimate of $322.12 million for the second quarter.

Subscription revenue for the quarter increased 17% year-over-year to $278.8 million, while training and services revenue grew 2% to $43.8 million.

The company ended the quarter with total deferred revenue balance of $944.4 million, an increase of 16% from a year ago.

Red Hat's main rival Novell, Inc. was acquired by Attachmate Corp. in a $2.2 billion deal in April last year.

by RTTNews Staff Writer

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