Shares of Red Hat Inc. (RHT) plunged 10 percent in extended trade on Wednesday, after its fourth-quarter revenues fell short of analysts' expectations. Nevertheless, Red Hat, the open-sourced Linux operating system provider, reported increased profit for the fourth quarter, driven largely by a 17 percent revenue growth. Earnings for the quarter, however, trumped Street expectations.
Red Hat's total subscription, training and services revenue for the quarter grew to $347.88 million from $297.01 million last year. Thirty-one analysts polled by Thomson Reuters had a consensus revenue estimate of $349.64 million for the quarter.
As in recent quarters, Red Hat continues to report growth in revenues, mainly thanks to corporate demand for its Linux software. Red Hat, which provides open source software products, has seen increasing demand for its products as corporates turn to cloud computing. Red Hat is the world's largest seller of Linux software.
Meanwhile, higher operating costs have put pressure on the company's bottom line. Adjusted operating margin for the three-month period dropped to 24 percent from 26 percent last year.
Raleigh, North Carolina-based Red Hat's fourth-quarter profit improved to $42.97 million or $0.22 per share from $35.97 million or $0.18 per share last year.
Excluding special items, earnings for the quarter rose to $0.36 per share from $0.29 per share last year. Analysts expected earnings of $0.30 per share for the quarter. Analysts' estimates typically exclude special items.
RHT closed Wednesday's trading at $49.97, up $0.72 or 1.46%, on a volume of 4.9 million shares on the NYSE. The stock, however, dropped $4.79 or 9.59% in after-hours trade.
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