September 18, 2003 2:28 PM PDT

Red Hat reports revenue increase

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Linux seller Red Hat reported $3.3 million in net income on revenue that grew 36 percent to $28.8 million for its most recent quarter.

The results for Red Hat's fiscal second quarter, which ended Aug. 31, were enough to push the Raleigh, N.C., company to a net income of 2 cents per share, a penny above the expectations of analysts surveyed by First Call.

During the quarter, Red Hat reported 2,300 new subscriptions to its Red Hat Enterprise Linux product, which combines a version of the Linux operating system and higher-level software with service and access to the Red Hat Network for updates. The company now has about 26,000 subscribers for the software.

Red Hat's software runs chiefly on Intel-based servers, though the company's coming Red Hat Enterprise Linux 3 will run also on IBM mainframes and on systems built on Intel's new Itanium processor. Red Hat is taking on companies such as Sun Microsystems that sell servers with Unix, on which Linux is based, as well as Microsoft.

Red Hat Enterprise Linux 3 is due in "early October," Matthew Szulik, chief executive of the Linux seller, said in August.

Red Hat's net income compared with a net income of $1.5 million in the company's first fiscal quarter and a net loss of $1.9 million for the year-ago quarter. The company generated $10.4 million in cash from operations.

Red Hat's gross margins increased to an all-time high of 72 percent, the company said.


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