Red Hat Beats Revenue Estimates, Acquires ManageIQ

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Investors are responding favorably to Red Hat’s latest earnings report. Although earnings fell 9.1 percent, the company’s revenue beat expectations by climbing 18 percent. In addition, the open source software firm announced plans to buy virtualization environment manager ManageIQ.

Bloomberg’s Dina Bass reported, “Red Hat Inc. (RHT), the largest seller of Linux operating system software, rose in late trading after reporting third-quarter sales that exceeded analysts’ estimates and saying it plans to buy cloud software company ManageIQ Inc. Red Hat rose 3.8 percent after the company yesterday reported sales of $343.6 million in the period that ended Nov. 30. Analysts had on average projected sales of $338.1 million, according to data compiled by Bloomberg. Excluding certain items, profit was 29 cents a share, meeting the average projection compiled by Bloomberg.”

MarketWatch’s Tess Stynes observed, “The provider of open-source software products has continued to record strong sales growth, though it has seen its bottom line pressured in recent quarters by rising operating costs and increases in spending to build up its storage business and for acquisition-related expenses. In the latest period, operating expenses climbed 26%.”

InformationWeek’s Charles Babcock detailed the acquisition plans, noting, “Red Hat will acquire virtualization environment manager ManageIQ for $104 million to beef up the capabilities of Red Hat Virtualization 3.1, its own virtualization management console.” He added, “The acquisition is aimed at making Red Hat a stronger player in the creation of multi-hypervisor, on-premises clouds capable of working with various public cloud services. ManageIQ workloads can be configured to run via Amazon Web Services EC2 or Microsoft Azure. Red Hat has plans to support Rackspace Cloud, a user of the Xen hypervisor, in the near future, said Bryan Che, general manager of the cloud business unit.”

Pete Barlas from Investor’s Business Daily wrote “The company side-stepped what might have been an abysmal quarter, Gregg Moskowitz, an analyst for Cowen and Co., said in a report released Friday. ‘Red Hat reported a solid overall quarter …,’ he wrote. ‘Looking forward, the company remains very well-positioned to enjoy healthy growth for the foreseeable future.'”