Slashdot Mirror
Red Hat Breaks Even, Beats Street Estimate
jfinke writes "Linux Today is running an article about Redhat's financial situation.
The company reported an adjusted net loss of $600,000, or break even per share, for the fourth quarter of fiscal 2001, compared to an adjusted net loss of $5.6 million, or $0.04 per share, for the fourth quarter of fiscal 2000. On a reported basis, the net loss was $24.2 million, or $0.14 per share, compared with a net loss of $24.6 million, or $0.17 per share in fiscal 2000." Congrats to all the folks there.
http://www.redhat.com/about/presscenter/2001/press _Q42001.html
I haven't been able to reach the article since it appears to be Slashdotted, but I would be surprised if it is anything more than a rehash of the press-release with the obligatory journalist missunderstandings and confusing rephrasing.
A quick-n-dirty summary/analyzis from someone with *some* economic education and experience:
Red Hat's fiscal year 2001 ranges from February 28 2000 to February 28 2001 and that's what they have released figures for.
They made a "reported net loss" of $24.2 million, compared to a net loss of $24.6 million the year before, which by first look might seem like an extremely small improvement. However, their revenue rised by 100%, from $42 million in 2000 to $84 million in 2001, hinting that they are expanding rapidly so their losses are likely to come from investments that haven't payed off yet.
However, their "adjusted net loss" changed much more, from $19 million in 2000 to $5.9 million in 2001. It's very typical that a company that makes large aquisitions/investments wants to spread the cost over a few years and that's most likely what they have done here. This is actually good since it keeps the company's result level (and thus its shareprice) a bit more stable. You can't make your big cost magically disappear, you can only spread it over a few years.
The thing that Red Hat emphasizes is that they only made an adjusted net loss of $600.000 for the *LAST QUARTER*, trying to give the impression that they are on the virge of going break-even. However, remember that this is an _adjusted_ net loss, so they can have done some magic here, but I do find their statement believable considering their rapid increase in revenue, but we can't know for sure until we see the next report.
What I find to be most promising is the rapid increase in revenue. Up 100% compared to a year ago. That shows to me that Red Hat is on the right track.
Whoever marked that as a troll obviously didn't read it, or doesn't understand money, or both.
Sure, MSFT may have had a better earnings/share, but look at their revenue growth: 18% over the last year vs RHAT's 106% growth. Indeed, RHAT had more growth between quarters (20%) than MSFT did all year.
I know where I'd put my money. (Of course, when you're small, it's easier to get large percentage gains. That works against you when you're large. The rolling average (filters out daily fluctuations) on MSFT's share price has been steadily downward for the last year.)
-- Alastair
Hooray! They lost money!
If I lost $600,000, I'd have to take a beating from Vinnie in the back alley... he'd probably break both my legs and an arm as well.
Spread that out over a million or so shares, and it doesn't look as bad though, right? I mean, that near break-even status is fantastic news compared to the bath that all the shareholders have taken if they got in at the IPO...
I'm not trying to bash Red Hat as a company... I think they make a fantastic (albeit relatively shitty) product and I think they're involved in a good (albeit financially stinko) cause. I wish them well. Just don't say congratulations when your money would have been better invested in shares of Krispy Kreme.
GnuCash
"If you have done 6 impossible things this morning, why not round it off with breakfast at Milliways" -- hhgg
In financial markets this is a very good thing.
Positive news for a technology company these days is great news for everybody on slashdot. Linux needs a company that can be held up in board meetings and pointed to --> Hey these guys are doing business, the street likes them, linux has some base, let's give it some thought.
I explained linux to my grandfather last night and opensource made him very incredulous. A bunch of random people writing code isn't going to break down conservative barriers. A large successful corporation whose business is linux will break those barriers. Positive news on Redhat is great from this perspective, especially given the present market conditions.
On a reported basis, the net loss was $24.2 million, or $0.14 per share, compared with a net loss of $24.6 million, or $0.17 per share in fiscal 2000.
They only broke even for one quarter using adjusted numbers. The actual losses are actually quite stunning. The term adjusted losses is just accounting voodoo to hide the company's deteriorating cash position.
Sure beats the news coming out of (...) Corel of late.
Actually today on the Canadian Broadcasting Corporation's website, Corel Reports a modest profit
"somehow magically adjust that to $600K"
Right there, you answered your own question! It's economic voodoo, involving books, calculators, accountants, and most likely the sacrifice of virgins to volcanoes.
-----
D. Fischer
ShoutingMan.com
If you're looking for ROI (return on investment) via growth, it's all about the slope, baby! I'd rather invest in $5 stocks that increase to $15, than invest in $100 stocks that increase to $110.
The more appropriate question, is whether Red Hat will exist in five years. (Of course, some ask the same about MS.) It's considered by most a bad idea to invest in companies that won't exist in a few years.
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D. Fischer
ShoutingMan.com
Ok, with the loss of $5.6 at 4 cents a share indicates a total number of shares of 140 million. (I have no idea if this is the actual amount of RH shares; fractional amounts of cents aren't listed.)
.4 cents, it's considered a break even loss.
A loss of $600,000 divided by that 140 million is a loss of $.0042857 per share. Since you can't have
Likewise, if they had a profit of $600,000, it would be considered a break even gain.
I like you, Stuart. You're not like everyone else, here, at Slashdot.
"REDMOND, Wash. -- Oct. 18, 2000 -- Microsoft Corp. today announced income before accounting change of $2.58 billion for the quarter ended Sept. 30, an 18 percent increase over the $2.19 billion reported last year. Revenue totaled $5.80 billion and diluted earnings per share before accounting change were $0.46. Diluted earnings per share for the Sept. 2000 quarter were $0.40 after including the required adoption of Statement of Financial Accounting Standards No. 133 "\
Microsoft's Earnings
Or...
"RESEARCH TRIANGLE PARK, N.C.--March 22, 2001-- Red Hat, Inc., the leader in in developing, deploying and managing open source solutions, today reported revenue of $27 million for the fourth quarter ended February 28, 2001, an increase of 106% versus the $13.1 million reported for the fourth quarter of fiscal 2000 and an increase of 20% over the third quarter of fiscal 2001"
Red Hat
You Decide....