Red Hat continues to impress with strong financial performance, delivering an impressive Q1 2009. Not bad when you consider the company gives away its products for free.
Red Hat pulled in $156.6 million in its Q1 (fiscal year 2009), a 32 percent increase over Q1 2008 and 11 percent growth over Q4 2008. Red Hat's operating income was also up 33 percent over the same quarter in 2008. But it's perhaps the deferred revenue (i.e., subscriptions and other services booked but not yet recognizable as revenue because they have yet to be delivered) that is most impressive: Up 36 percent to $491.8 million.
Clearly, Red Hat is doing something right. Many things right, in fact.
I asked the company specifically about JBoss performance, as rumors have swirled that JBoss has lagged under Red Hat's guidance. Quite the opposite. While there were initial hiccups in bringing the JBoss brand under the Red Hat umbrella, the unit is firing on all cylinders now, contributing a healthy amount to the Red Hat top and bottom lines. Red Hat wouldn't give specific numbers, but I heard the JBoss confidence from a range of different sources within Red Hat.
What about the cost side of the equation? Here there is perhaps even more cause for optimism, but also a creeping concern.
... Read moreSoftware licensing drove a healthy increase in revenue for Oracle during its fourth quarter.
For the quarter, which ended May 31, the enterprise software giant reported revenue of $7.24 billion, up 24 percent from the same period a year earlier. During that three-month period, revenue from new software licenses rose 27 percent to $3.14 billion, and revenue from software license updates and product support rose 25 percent to $2.83 billion.
Revenue from services also was on the increase, though not by quite as much. It was up 18 percent, to $1.26 billion.
Oracle said that its net income for May quarter was $2.04 billion, or 39 cents per diluted share, a jump of 27 percent.
In April, Oracle completed its $6.7 billion acquisition of BEA Systems.
In May, Forbes reported that Oracle CEO Larry Ellison was the best-remunerated executive in the tech sector--and overall--with a total 2007 compensation package valued at $192.9 million.
This blog has been updated with Dell executive and analyst comments.
It's not a blow-out quarter, but Dell investors will likely be pleasantly surprised.
The Round Rock, Texas, PC maker reported its first-quarter earnings Thursday, with revenue of $16 billion, a 9 percent improvement from a year ago, and earnings of 38 cents per share, a 12 percent increase.
Analysts were expecting earnings of 34 cents per share and revenue of $15.4 billion to $16.2 billion. In after-hours trading Thursday, shares of Dell were up 7.5 percent.
Following a turbulent 2007, Thursday's results were a more encouraging beginning for this year. "We're beginning to see positive results in our performance," founder and CEO Michael Dell said during a conference call with company investors Thursday afternoon. He pointed to growth in all business segments in all regions as the impetus. He said that while the industry grew 14 percent in unit shipments, Dell was able to grow 22 percent.
But is this the comeback that Dell has been promising, and investors have been waiting for? Not quite. However, it appears the company is at least on the right track. Though the No. 2 PC vendor in the world has fallen behind both HP and Acer in notebook sales, Dell showed improvement in the past year. Notebook revenue was up 22 percent over the past year, but just 2 percent from the previous quarter.
"I think our results demonstrate we made some progress, but still a lot more to be done," said outgoing Chief Financial Officer Donald Carty, who is to be replaced by Brian Gladden on June 13.
Cost reduction was one of the company's main goals in the past year. Dell reduced its headcount by 3,700 people during the quarter, many in its consumer products divisions and in international sales, for a total of 7,000 in the past year, according to Carty. The company said in the same quarter a year ago it planned on removing 8,800 positions. Dell also said it has added about 2,700 employees through acquisitions, bringing the net employee reduction to 5 percent, and Carty emphasized that more thinning of company ranks is coming.
The Wall Street Journal's Walt Mossberg interviews Michael Dell at the D6 conference this week.
(Credit: Dan Farber/CNET News.com )It's been over a year since Michael Dell hit the reset button, promising to revitalize his company that had fallen behind its main competitor, Hewlett-Packard. Dell admitted publicly at D6 Wednesday that his company had indeed missed a few very big trends, including retail and a focus on consumer products.
It was also a year ago that after telling his employees the company's hallowed direct model was no longer "a religion," Dell products first began showing up in Wal-Mart stores. Now Dell PCs and printers are available at many of the major electronics retail outlets worldwide.
Carty specifically pointed to retail initiatives as one of the driver's of the better-than-expected quarterly performance. Dell added 2,000 more retail locations worldwide in the past quarter, including Costco in the U.S., Best Buy in Canada, and several large Chinese outlets, to bring the total to 13,000 locations around the world.
But it's still too early to tell if the company's momentum in retail can be sustained.
"Are they getting a pop because they've just entered retail?," asked John Spooner, analyst with Technology Business Research. "Retail didn't get it fully in place until this January, so I wouldn't pass judgment until Q4 this year."
Unfortunately the timing isn't great in regard to the U.S. economy. In the earnings announcement, Dell acknowledged "conservatism in IT spending in the U.S. particularly with its global and large customers as well as public, small, and medium business accounts." The company said it expects the conservative spending trend to continue on through summer.
However, the company is making huge gains internationally. For the first time in the company's history, sales outside of the U.S. reached 50 percent. Dell particularly has its eye on the booming Chinese market.
"We believe China is going to become the largest retail market in the world for PCs," Michael Dell said. Dell's unit sales increased 140 percent in China over the last year, and the company plans to reach 3,500 retail locations in China alone by the end of the next quarter.
China, as well as India, are becoming the place for Dell to experiment, not only with products, but with different business models and with customers with no previously established sense of what to expect from Dell.
"In China you can blast out a run of 1 million notebooks, call them Dell 'X,' sell to distributors, and do pretty well," said Spooner. It's a great way for the company to test out products and market strategies before bringing them to their more established markets.
And it's clear there's still more change to come. Michael Dell said the company is still planning to introduce many more new notebook models by the end of this year. He specifically mentioned an "active back-to-school" season. Besides the already announced Latitude E series, it will be interesting to see if this is when Dell decides to introduce the mini-notebook Michael Dell was seen carrying around with him at the D6 conference in Carlsbad, Calif., Wednesday.
Yes, Novell has a ways to go to catch up with Red Hat, but with yet another strong quarter it's becoming increasingly clear that the enterprise Linux market is a two-horse race again. Importantly, Novell is competing much more strongly without backup from Microsoft.
Novell saw its Linux business top $29 million in its second fiscal quarter of 2008 ($30 million in total Open Platform Solutions revenue), up 31 percent over the same period a year ago, with other business units also seeing healthy growth. Only its Workgroup business unit continues to founder, down 1 percent in the period that ended April 30.
More importantly (to me), I asked Justin Steinman, Novell's director of Marketing for Linux and Open Platforms, how much of this is attributable to Novell's partnership with Microsoft. It turns out that Novell is starting to really grow its Linux business on its own, though it still looks to Microsoft as a strong partner to drive interoperability:
Novell's core Linux business is growing. By "core," I mean that our non-Microsoft- related Linux business is growing. These are Suse Linux Enterprise Server subscriptions sold directly by the Novell sales force or by our channel partners, without any Microsoft certificates or Microsoft salespeople involved.
... Read more
Strong sales in emerging markets boosted Hewlett-Packard's second-quarter earnings to $2.2 billion, or 87 cents a share, up 24 percent from a year earlier.
Revenue for the quarter rose 11 percent to $28.3 billion, the company said Tuesday.
Those figures beat analyst estimates of earnings per share of 85 cents and revenue of $28.1 billion, according to Thomson First Call.
Earnings excluding one-time items were $2.1 billion, or 80 cents a share.
HP forecast revenue for the third quarter to be about $27.3 billion to $27.4 billion and earnings per share excluding items to be 82 cents to 83 cents.
HP raised its full-year revenue forecast to between $114.2 billion and $114.4 billion, from previous guidance of $113.5 billion to $114 billion. Full-year per-share earnings excluding items are forecast to be $3.54 to $3.58.
Analysts were forecasting third-quarter earnings per share of 82 cents and revenue of $27.35 billion and full-year earnings per share of $3.53 and revenue of $114.2 billion.
Weighed down by its financial unit, Sony posted a $45 million loss for its fourth quarter earnings Wednesday.
Analysts were expecting an average estimated profit of $260 million for the quarter.
Revenue for Sony's video game unit, which competes head-to-head with Microsoft's Xbox 360 and the Nintendo Wii, grew by 26 percent in the past year based on better sales of the PlayStation 3 console.
Still, the bright point of the company's quarterly report was its electronics business. Revenue was up 9 percent due to increased sales of its digital cameras, video cameras, and notebook PCs.
The TV unit struggled though, and in April the company announced it was replacing its top TV exec. But Sony has higher hopes for this year. It said it plans to sell 17 million flat panel TVs in the next year, an ambitious goal. To do so, it will continue selling entry-level models, a practice it began last summer at Target and Wal-Mart.
Video game giant Electronic Arts on Tuesday posted fourth-quarter revenues that beat Wall Street expectations and looked ahead to fiscal 2009, when it expects to release 15 new games.
Net revenue for the quarter was $1.127 billion, up 84 percent as compared with $613 million for the prior year, the company said. Net loss for the quarter was $94 million, widening from a net loss of $25 million for the prior year.
"On balance, we're very pleased with our revenue growth, but not yet happy with our profit margins," EA CEO John Riccitiello said in a statement. "In fiscal 2009, we expect to deliver another $1 billion in revenue growth and to double our operating profit on the strength of our slate of titles."
Electronic Arts, which is based in Redwood City, Calif., is attempting to buy Take-Two Interactive Software, maker of the blockbuster Grand Theft Auto series, for $2 billion.
Network equipment maker Cisco Systems beat analyst expectations when it reported earnings Tuesday, but its lukewarm guidance showed that the slowing U.S. economy is still impacting the company.
Cisco, the world's largest supplier of equipment that shuttles traffic around the Internet, reported a net profit for the fiscal quarter of 2008 of $1.8 billion. This was down from profits of $1.9 billion in the same quarter a year ago, but it still beat analyst expectations.
Revenue for the quarter was up 10.4 percent to $9.8 billion. The company had forecast an increase in revenue of 10 percent.
Analysts believe that Cisco's results mean the company's business is stabilizing. But the sagging economy will still continue to impact its earnings for the next few quarters.
Last quarter, CEO John Chambers said the company was seeing a slowdown in technology spending in Europe and the U.S. And he predicted it would take two to five quarters for things to rebound.
On Tuesday's conference call, Chambers said that spending in the U.S. is still tight. And he anticipated that budgets will be constrained through at least the next two quarters. He said the company will likely see sales growth in the 9 percent to 10 percent range in the quarter that ends in July. But he maintained that the company's long term forecast of 12 percent to 17 percent revenue growth is still doable, indicating that he thinks the slump will be short-lived.
Sun Microsystems' most recent quarter took a hit from a slumping U.S. economy, according to Sun CEO Jonathan Schwartz. Revenue from Sun's server computers and storage products fell 2.8 percent. The company plans up to 2,500 job cuts as it seeks to balance expenses with growth.
But from where will the growth come?
Sun is betting big on open source to drive adoption, which should, in turn, drive revenue (done right). I spoke with the executive vice president of Sun's Systems business, John Fowler, the other day, and I asked him about whether the strategy is, in fact, working. How much growth is Sun seeing in its software business?
... Read moreVerizon Communications' hot streak continued during the first quarter of 2008.
The company said Monday that first quarter profits jumped about 10 percent to $1.64 billion, fueled by demand for its mobile phone service and fiber-to-the-home service called Fios.
Revenues grew about 5.5 percent to $23.8 billion, the company said. About $11.7 billion of that revenue came from its wireless business, an increase of about 13.2 percent from the first quarter of 2007.
There's no question that Verizon Wireless, which is jointly owned by Vodafone, has a good reputation as a wireless provider. Its network is considered to be highly reliable, and the company has always done well retaining customers.
And now Verizon is getting those customers to use more of its data services, such as picture messaging, text messaging and Internet surfing. In fact, it looks like mobile data is driving growth in the highly profitable wireless business with revenue from data services jumping 48.9 percent from the previous year generating about $2.3 billion in revenue.
Verizon reported that its customers sent or received more than 58 billion text messages and 1.1 billion picture/video messages during the quarter. And customers completed 34.6 million music and video downloads. On average, Verizon's wireless customers spent $11.94 a month on data services, an increase of about 33 percent from a year earlier.
Mobile data accounted for about 20 percent of all wireless sales for the quarter, but the company hopes it will eventually account for a bigger chunk of the revenue pie in the future. About 58 percent of Verizon's retail customers had broadband capable devices at the end of the first quarter, the company said.
Wireless operators, such as Verizon, are counting on consumers to use even more data in the future. That's the reason Verizon spent $9.3 billion on new wireless spectrum licenses in the Federal Communications Commission's recent 700MHz spectrum auction. The company has already said that it plans to use this spectrum to build its 4G wireless broadband network that will deliver even faster data speeds to its customers using a technology called LTE.
The company is also trying to spur innovation by opening its network to a faster certification process for new devices and applications. The hope is that streamlining the process will allow developers to get products and services that use the Verizon network on the market faster than before offering customers new and cool devices and applications first.
But wireless isn't the only shining light for Verizon. The company also saw big growth in its fiber-to-the-home service called Fios. This service, which includes high-speed broadband access, telephony and TV service, competes head-to-head with cable offerings. Verizon said it added 263,000 new TV customers in the first quarter bringing the total number of Fios TV customers to 1.2 million. In terms of broadband, the company said the majority of its new broadband customers were for Fios. The company added 262,000 Fios broadband connections during the quarter for a total of 1.8 million Fios broadband customers.
Verizon CFO Doreen Toben
(Credit: Verizon Communications)As expected, Verizon continued to see declines in its traditional telephony business, which fell 2.5 percent during the quarter. The company cut about 6,500 workers in 2007 and more job cuts in the traditional telephony business are expected throughout the year, company CFO Doreen Toben said.
Verizon's bets on wireless and fiber seem to be paying off. But as the overall U.S. economy softens it will be interesting to see if the company's strong growth will continue. My gut feeling is that Verizon is in good shape. Cell phone, TV, and broadband service are three things that most people won't want to live without even if they are crunched for cash. But the big question is how much more will people be willing to spend on the extras, such as mobile music downloads, mobile TV service or the highest level TV and broadband packages? That's the big question that will likely determine how much growth Verizon will experience in the future.
