Cycon writes "Red Hat has just announced that they have finally achieved a positive cash flow! Today they announced that in the quarter ending May 31, 2001, they have seen $25.6 million in revenue, with an adjusted net income of $600,000. Congradulations to everyone at RHAT!"
Red Hat remains in red: Posts $27.6M net loss
by
Anonymous Coward
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· Score: 4
Red Hat remains in red: Linux software maker posts $27.6M quarterly net loss
RESEARCH TRIANGLE PARK, N.C., Jun 19, 2001 (The Canadian Press via COMTEX) -- Linux software packager Red Hat Inc. said Tuesday it broke even on an operating basis in the quarter ended May 31, meeting Wall Street estimates.
Red Hat reported adjusted net income of $600,000 US, or break even per share, in the first three months of its financial year. That compared with an adjusted net loss of $3.7 million, or two cents per share, a year earlier.
Before adjustments, the net loss was $27.6 million, or 16 cents a share, compared with a net loss of $17.4 million, or 11 cents a share, in the first quarter of the previous year.
Red Hat reported revenue of $25.6 million, down five per cent from the previous quarter but up 18 per cent from the year-earlier period.
Red Hat, which has yet to report a profit since it went public, markets a CD-ROM version of the open-source Linux operating system and provides customers with technical support.
The online source for news sports entertainment finance and business news in Canada
Copyright (C) 2001 The Canadian Press (CP), All rights reserved
Re:Red Hat remains in red: Posts $27.6M net loss
by
ProfDumb
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· Score: 5
Red Hat remains in red: Posts $27.6M net loss
If you go look at the actual figures, you will see that most of that loss is "depreciated goodwill" -- when Red Hat acquires a company they put "goodwill" on their books as an asset and then depreciate it according to very arbitrary accounting rules. In reality, Red Hat did not buy depreciating physical assets, but rather the skills and reputations, which are not depreciating.
On the other hand, the loss also contains several million in stock options, which really are an expense to the company. The "cash flow" number in headline ignores stock options. Therefore, Red Hat really is losing money, but nothing like $27 million.
Re:Red Hat remains in red: Posts $27.6M net loss
by
selectspec
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· Score: 5
Red hat is in the black actually. They had a posative cash flow this year. In otherwords more cash came in than went out. The net loss is attributable to the ammortization of aquistions from prior years. Ammoritzations are not attributable to cash flows only to balance sheets and income statements. When one asks whether a company is in the red or the black, it is implicit that they are refering to cash flows and/or the operating budget (which like cash flows doesn't include ammortizations).
--
Someone you trust is one of us.
Re:Red Hat remains in red: Posts $27.6M net loss
by
TGK
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· Score: 5
Goodwill dosn't quite work like that but ok. Say company X buys company Y for $5.0x10^9. Now, if we sit down and count all of company Y's assets and they come up to be, say, $3.6x10^9 the remainder is something called "goodwill." These are intangable assets. Things like, perhaps, market share, location, reputation. In short, things that no company can go out and buy, and thus do not have a dollar value of their own. Now the thing is, goodwill, must, under GAAP (Generaly Accecpted Accounting Principles) be ammortized off over a period not to exceed 40 years. Because it's always nice to have assets sticking around most companies use 40 years as their ammortization period.
So yes, ammortization of old expenses, especialy those having to do with the depreciation of goodwill is going to play a huge roll in this.
When we say a company is "in the red" or "in the black" the meaning differs depending on the period we are talking about. If we're refering to a year in general, the statement usualy refers to the income statement and or the statement of cash flows. The key portion of this is to ballance Revenue against COGS (cost of good sold). For Red Hat, COGS will include R&D work and will thus be very high. Revenue from goods sold will of course be close to zero due to the nature of open source. This leaves Red Hat makign it's money from Tech support and subscription servies as was so aptly pointed out above. Here's the other key, R&D expenses can be ammortized as well by a sufficiently creative accountant. Afterall, if this R&D is going to benefit the company over the next 10 years, then the expensce of that research can be spread out over those 10 years.
What this amounts to is this. We rather need a good solid stock holders report from RHAT to pour over until we can get some answers. Never trust what a company claims to the media, trust what it is required by law to report to the IRS. (And not even that in some cases)
This has been another useless post from....
-- Killfile(TGK)
No trees were killed in the creation of this post. However, many electrons were inconvenienced.
Watch carefully. In real dollar terms it can't go much lower, but this close to zero even a small downtick can wipe out a lot of equity.
If your intent is to buy Redhat, buy it after it has begun to trend up, and after it has a down day. And decide beforehand exactly how much you are willing to lose and place a stop order for that amount at the time of purchase. If you are right and Redhat continues up, move your stop order up along with it, to protect your investment. It's too low to the ground to not to be super cautious.
And for the love of God, please don't interpret this as investment advice. It's not investment advice, it's merely a suggestion of things to think about and study before you make any investment decisions.
Don Negro
--
Don Negro Perl 6 will give you the big knob. -- Larry Wall
I wonder how much come from the "old" Red Hat, and how much come from the always profitable Cygnus Solutions. Buying profitable companies is one way to become profitable.
Of the wins listed, about half would be typical Cygnus Solutions contracts (GNUPro), and half would be typical Red Hat contracts (Linux). A few could be either or neither, maybe made possible by the merger.
They reported a net profit, which is different from a positive cash flow. A company can have a positive cash flow (eg, just after a rights issue) but still be making a loss and it can have a negative cash flow (eg, large capital purchases which don't fully affect profit in the year of purchase) and still make a profit.
A full look at the finances would reveal if they do have a positive cash flow, but the two don't go hand-in-hand. --
Did you notice how many of the deals they trumpeted in the press release are actually from the Cygnus side of the business? I wonder whether the Linux half of things is profitable.
Imagine someone at a computer security firm telling the boss that he/she wants to become a "Black Hat" user.
Well, the OpenBSD zealots would have you believe that the reaction wouldn't be any worse than if someone at a security firm told her boss that she wanted to be a "Red Hat" user. *rimshot*
(Disclaimer: I use and like Red Hat)
Re:"comunists" making money ?
by
Zico
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· Score: 3
Yo! How 'bout waiting until RedHat turns a real profit before spewing that nonsense? See, RedHat actually spent a lot more money than it took in for the past quarter. About two more years worth of "success" like this quarter, and the company's going to be taking a dirt nap.
Sorry, but RedHat's announcement hasn't seemed to have fooled anybody but some people around here desperate for any good news about Linux. That's why W.R. Hambrecht today downgraded RedHat's and a reason why the stock is down from where it closed yesterday. The revenue for the quarter was 7% less than what RedHat told Wall Street to expect, revenue is 5% down from last quarter, revenue from their network consulting services are already dropping, and they're now refusing to give analysts any guidance for RHAT performance in future quarters. Maybe they've run out of book-keeping tricks?:) "None of the other companies I cover have refused to give guidance," Prakesh Patel, analyst with WR Hambrecht and Co. "It definitely is troubling. Regardless of the economic environment, the company has a sales pipeline and should have estimates of closing deals that's the job of management."
And that doesn't even address the big gun aimed right at them that goes by the name IBM. If IBM ever decides to sell their own Linux distribution, it's bye-bye RedHat.
Forget the M$/Linux thing, forget the fact that 600K doesnt seem significant compared to other companies, forget the dot-com hype and fall.
A company using OS as its base has managed to make a profit in a few years and survive. That may not legitimate the business model, but it gives us some hope that it is legitimate or can be legitimate.
And that, all things aside, is pretty damn neat and inspiring. So congrats to the Red Hat people.
-- "The Sage treasures Unity and measures all things by it" - Lao Tzu
Re:Difference between "adjusted" and "reported"?
by
throx
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· Score: 3
It can't be written off because it is, in fact, money that they don't have any more. As pointed out by other in this thread though, it does NOT include stock options which are a going to be a major hit to that income figure.
Realistically, Red Hat isn't in the black and still won't be for some time. Don't go spending your hard earned cash on RHAT just yet...
--
Fear: When you see B8 00 4C CD 21 and know what it means
Difference between "adjusted" and "reported"?
by
throx
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· Score: 5
With the SEC investigating the occurance of Tech companies not reporting employee stock options as part of the company's liabilities, how much faith can we put in this statement when you look at the full quote:
"Adjusted" net income of $600,000 (up from a loss of $3.7m last year).
"Reported" net loss of $27.6m (from a loss of $17.4m last year).
If I'm correct, doesn't this mean that at the end of the day they are actually worse off than they were last year and just putting PR spin on the figure?
--
Fear: When you see B8 00 4C CD 21 and know what it means
Re:Difference between "adjusted" and "reported"?
by
A+Commentor
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· Score: 5
Purchases of companies have to be 'accounted for'. Since I don't know what RH paid for Cygnus, and I don't want to look it up, lets assume $30 Million. Also let's assume that the accounting 'books' for Cygnus says that their net worth is $2 Million.
So now they just paid $30 Million (could be in stock or cash), yet they can only add $2 in net worth to their books. In order to balance the books they must right off the $28 Million difference.
They can do it all at once, or spread it out over many quarters(i.e. get a tax benefit from it). They call this good will write-off. Even though RHat believes the company is worth $30 Million to buy, the difference between this purchase price and the accuired company's net worth have to be written off.
It doesn't impact the cash flow, which is critical. For cash flow they were generated postive $1.5 M, i.e. they now have $1.5 M more in the bank...
--
Looking for any old 8-bit Heathkit/Zenith software/hardware - http://heathkit.garlanger.com
The announcement is that Red Hat are showing a profit for the first time: they certainly will have shown positive cashflow already (ie. cash going into their money accounts minus cash going out) when they were floated.
Funny But According To Microsoft...
by
EXTomar
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· Score: 3
...(the previous posted topic)companies that want to make a profit are supposed to stay the hell away from GPL code. Go figure.
Red Hat can't make a profit. That would make them a commercial company. Bill Gates himself said that it isn't possible for commercial companies to use GPL code. I think those Red Hat GPL hippies really ought to start reading Slashdot before making such ludicrous claims about profitability.
"comunists" making money ?
by
C0vardeAn0nim0
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· Score: 3
IIRC M$ said that the free sotware movement was a "comunist" thing, and that it was a threat to the american way of life and for capitalism.
Well, if free software is communism or no, I don't know, but a company making profit with something IS capitalism in it's most pure form and is nice to see Red Hat proving that a capitalism company can make money with free stuff.
Time to eat some of your words Microsoft...
--
-- What ? Me, worry ?
Re:You're fooling yourself.
by
ocbwilg
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· Score: 3
You've got the source code; have you personally audited it from top to bottom, and verified that there are no back doors? Even if you have, have you also made your own compiler to rebuild everything?
No, I haven't. I have neither the time nor the inclination. Remember me? The guy who's still stuck using the shitty and insecure MS products at work?
But the point is that I could if I wanted to. And there are people out there that do comb the code looking for bugs and backdoors. They can do this because all of the Linux code is out in the open where we can get at it if we want to. If every person who used a computer had to audit the source code for their OS and apps before using it, we'd still all be using typewriters. But this isn't about paranoia, it's about control. Linux isn't better because I can see if there are backdoors (though it is an added bonus). Linux is better because we all own it and can do (almost) whatever we want with it so long as we keep it in the community.
If you've ever heard the phrase "security by obscurity", don't pretend that openness is a magic bullet;
Closed source products are by very definition "security through obscurity." All that means is that the bugs and backdoors are there, clever people can still find them without the source code, but you aren't allowed to fix them yourself if you so choose. Now how is that security at all?
Of course openness isn't a magic bullet, but it is the first step. Vigilance is more likely the magic bullet. Just like having an open government (like we have in the US via FOIA and public elections) isn't protection against abuses of power. We must still make use of that openness. We must be on the lookout for abuses, and we need to point them out and correct them when we can. The GPL allows this with its code. MS does not. With Microsoft you have a closed government, meeting in smoky back-rooms and making deals behind closed doors. With MS you have a government that is not open to public scrutinization by the populace from which it derives its power. That is the true difference between closed and open source (of any kind).
For what it's worth, MS releases code to large clients; if there were glaring holes in there, well. I'd say they'd be released to the public,
Yes it does, for what it's worth (not much). If you are a big enough company and you can convince MS that you have a legitimate need for the source code for parts of the OS you can license it from them, for a fee, under NDA and without the right to make any changes. Now how is that open? Only the largest companies ever get to see the code, and they can't use it for anything except to optimize their own programs. Even if there were backdoors or seriously critical bugs in the code they can't talk about them.
It's been said before, many times, many ways: Microsoft's "code sharing" with major OEMs/vendors has absolutely none of the benefits of open source. It is pure marketing.
Re:Not to piss on this circle-jerk...
by
ocbwilg
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· Score: 5
...but as long as we're pooh-poohing M$ (how clever!) and rooting for GPL and Linux and whatever... what do Microsoft's financials look like this quarter? Not that facts should mean anything around here.
Don't be ridiculous. You're actually suggesting that that we compare numbers from a smallish, niche-market company that has been in business for 5 years with those of a vicious, multinational, multi-billion dollar, anticompetitive monopolist that has been in business for 20 years? I've never heard such lunacy.
If you think that this is about money then you are very sadly mistaken. It is about ideology. It is about the fact that you don't have to be an extortionist or a monopolist or a tyrant in order to be a successful company. It is a testament to the power of open source that such a small (dare I say nearly insignificant) company can actually survive to operational profitability while competing against a company the size of Microsoft.
Do you remember what has happened to the rest of Microsoft's competitors over the past 20 years? They've been either acquired by The Beast, run out of business by The Beast, or beaten so badly into submission by The Beast that they've had to seek government protection. The only real exceptions to this are companies who were already multinational multibillion dollar companies before they began competing with Microsoft. RedHat (and open source in general) hasn't had any of those things happen to them. This is a great day for open source. Free speech for everyone!
Slashdot Mirror
Red Hat remains in red: Linux software maker posts $27.6M quarterly net loss
RESEARCH TRIANGLE PARK, N.C., Jun 19, 2001 (The Canadian Press via COMTEX) -- Linux software packager Red Hat Inc. said Tuesday it broke even on an operating basis in the quarter ended May 31, meeting Wall Street estimates.
Red Hat reported adjusted net income of $600,000 US, or break even per share, in the first three months of its financial year. That compared with an adjusted net loss of $3.7 million, or two cents per share, a year earlier.
Before adjustments, the net loss was $27.6 million, or 16 cents a share, compared with a net loss of $17.4 million, or 11 cents a share, in the first quarter of the previous year.
Red Hat reported revenue of $25.6 million, down five per cent from the previous quarter but up 18 per cent from the year-earlier period.
Red Hat, which has yet to report a profit since it went public, markets a CD-ROM version of the open-source Linux operating system and provides customers with technical support.
The online source for news sports entertainment finance and business news in Canada
Copyright (C) 2001 The Canadian Press (CP), All rights reserved
--
Forget Napster. Why not really break the law?
"Remember when the U.S. had a drug problem, and then we declared a War On Drugs, and now you can't buy drugs anymore?"
If your intent is to buy Redhat, buy it after it has begun to trend up, and after it has a down day. And decide beforehand exactly how much you are willing to lose and place a stop order for that amount at the time of purchase. If you are right and Redhat continues up, move your stop order up along with it, to protect your investment. It's too low to the ground to not to be super cautious.
And for the love of God, please don't interpret this as investment advice. It's not investment advice, it's merely a suggestion of things to think about and study before you make any investment decisions.
Don Negro
Don Negro
Perl 6 will give you the big knob. -- Larry Wall
I wonder how much come from the "old" Red Hat, and how much come from the always profitable Cygnus Solutions. Buying profitable companies is one way to become profitable.
Of the wins listed, about half would be typical Cygnus Solutions contracts (GNUPro), and half would be typical Red Hat contracts (Linux). A few could be either or neither, maybe made possible by the merger.
A full look at the finances would reveal if they do have a positive cash flow, but the two don't go hand-in-hand.
--
Did you notice how many of the deals they trumpeted in the press release are actually from the Cygnus side of the business? I wonder whether the Linux half of things is profitable.
-- Ed Avis ed@membled.com
(Disclaimer: I use and like Red Hat)
Yo! How 'bout waiting until RedHat turns a real profit before spewing that nonsense? See, RedHat actually spent a lot more money than it took in for the past quarter. About two more years worth of "success" like this quarter, and the company's going to be taking a dirt nap.
Sorry, but RedHat's announcement hasn't seemed to have fooled anybody but some people around here desperate for any good news about Linux. That's why W.R. Hambrecht today downgraded RedHat's and a reason why the stock is down from where it closed yesterday. The revenue for the quarter was 7% less than what RedHat told Wall Street to expect, revenue is 5% down from last quarter, revenue from their network consulting services are already dropping, and they're now refusing to give analysts any guidance for RHAT performance in future quarters. Maybe they've run out of book-keeping tricks? :) "None of the other companies I cover have refused to give guidance," Prakesh Patel, analyst with WR Hambrecht and Co. "It definitely is troubling. Regardless of the economic environment, the company has a sales pipeline and should have estimates of closing deals that's the job of management."
And that doesn't even address the big gun aimed right at them that goes by the name IBM. If IBM ever decides to sell their own Linux distribution, it's bye-bye RedHat.
Cheers,
Forget the M$/Linux thing, forget the fact that 600K doesnt seem significant compared to other companies, forget the dot-com hype and fall.
A company using OS as its base has managed to make a profit in a few years and survive. That may not legitimate the business model, but it gives us some hope that it is legitimate or can be legitimate.
And that, all things aside, is pretty damn neat and inspiring. So congrats to the Red Hat people.
"The Sage treasures Unity and measures all things by it" - Lao Tzu
It can't be written off because it is, in fact, money that they don't have any more. As pointed out by other in this thread though, it does NOT include stock options which are a going to be a major hit to that income figure.
Realistically, Red Hat isn't in the black and still won't be for some time. Don't go spending your hard earned cash on RHAT just yet...
Fear: When you see B8 00 4C CD 21 and know what it means
With the SEC investigating the occurance of Tech companies not reporting employee stock options as part of the company's liabilities, how much faith can we put in this statement when you look at the full quote:
"Adjusted" net income of $600,000 (up from a loss of $3.7m last year).
"Reported" net loss of $27.6m (from a loss of $17.4m last year).
If I'm correct, doesn't this mean that at the end of the day they are actually worse off than they were last year and just putting PR spin on the figure?
Fear: When you see B8 00 4C CD 21 and know what it means
The announcement is that Red Hat are showing a profit for the first time: they certainly will have shown positive cashflow already (ie. cash going into their money accounts minus cash going out) when they were floated.
...(the previous posted topic)companies that want to make a profit are supposed to stay the hell away from GPL code. Go figure.
to change the Company Name?
And you were doing so well.
Not bad--they beat Amazon!
"People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban
Red Hat can't make a profit. That would make them a commercial company. Bill Gates himself said that it isn't possible for commercial companies to use GPL code. I think those Red Hat GPL hippies really ought to start reading Slashdot before making such ludicrous claims about profitability.
IIRC M$ said that the free sotware movement was a "comunist" thing, and that it was a threat to the american way of life and for capitalism.
Well, if free software is communism or no, I don't know, but a company making profit with something IS capitalism in it's most pure form and is nice to see Red Hat proving that a capitalism company can make money with free stuff.
Time to eat some of your words Microsoft...
--
What ? Me, worry ?
You've got the source code; have you personally audited it from top to bottom, and verified that there are no back doors? Even if you have, have you also made your own compiler to rebuild everything?
No, I haven't. I have neither the time nor the inclination. Remember me? The guy who's still stuck using the shitty and insecure MS products at work?
But the point is that I could if I wanted to. And there are people out there that do comb the code looking for bugs and backdoors. They can do this because all of the Linux code is out in the open where we can get at it if we want to. If every person who used a computer had to audit the source code for their OS and apps before using it, we'd still all be using typewriters. But this isn't about paranoia, it's about control. Linux isn't better because I can see if there are backdoors (though it is an added bonus). Linux is better because we all own it and can do (almost) whatever we want with it so long as we keep it in the community.
If you've ever heard the phrase "security by obscurity", don't pretend that openness is a magic bullet;
Closed source products are by very definition "security through obscurity." All that means is that the bugs and backdoors are there, clever people can still find them without the source code, but you aren't allowed to fix them yourself if you so choose. Now how is that security at all?
Of course openness isn't a magic bullet, but it is the first step. Vigilance is more likely the magic bullet. Just like having an open government (like we have in the US via FOIA and public elections) isn't protection against abuses of power. We must still make use of that openness. We must be on the lookout for abuses, and we need to point them out and correct them when we can. The GPL allows this with its code. MS does not. With Microsoft you have a closed government, meeting in smoky back-rooms and making deals behind closed doors. With MS you have a government that is not open to public scrutinization by the populace from which it derives its power. That is the true difference between closed and open source (of any kind).
For what it's worth, MS releases code to large clients; if there were glaring holes in there, well. I'd say they'd be released to the public,
Yes it does, for what it's worth (not much). If you are a big enough company and you can convince MS that you have a legitimate need for the source code for parts of the OS you can license it from them, for a fee, under NDA and without the right to make any changes. Now how is that open? Only the largest companies ever get to see the code, and they can't use it for anything except to optimize their own programs. Even if there were backdoors or seriously critical bugs in the code they can't talk about them.
It's been said before, many times, many ways: Microsoft's "code sharing" with major OEMs/vendors has absolutely none of the benefits of open source. It is pure marketing.
...but as long as we're pooh-poohing M$ (how clever!) and rooting for GPL and Linux and whatever... what do Microsoft's financials look like this quarter? Not that facts should mean anything around here.
Don't be ridiculous. You're actually suggesting that that we compare numbers from a smallish, niche-market company that has been in business for 5 years with those of a vicious, multinational, multi-billion dollar, anticompetitive monopolist that has been in business for 20 years? I've never heard such lunacy.
If you think that this is about money then you are very sadly mistaken. It is about ideology. It is about the fact that you don't have to be an extortionist or a monopolist or a tyrant in order to be a successful company. It is a testament to the power of open source that such a small (dare I say nearly insignificant) company can actually survive to operational profitability while competing against a company the size of Microsoft.
Do you remember what has happened to the rest of Microsoft's competitors over the past 20 years? They've been either acquired by The Beast, run out of business by The Beast, or beaten so badly into submission by The Beast that they've had to seek government protection. The only real exceptions to this are companies who were already multinational multibillion dollar companies before they began competing with Microsoft. RedHat (and open source in general) hasn't had any of those things happen to them. This is a great day for open source. Free speech for everyone!
Has hell frozen over? Or are they just supercooling their red hat boxen down there?
I'm the stranger...posting to