Red Hat In The Black for Q3

wheeeee! writes "Red Hat has posted a profit for the third quarter. Well, a meager $300 grand of actual net, but still a profit nonetheless. Their total revenue of $24.3 million was higher than expected. The cash flow appears to have been spurred by an increase in sales of RH's Advanced Server, of which 12000 were sold, compared to 8000 the previous quarter. RH says they're now following the Generally Accepted Accounting Principles, developed in the wake of recent accounting troubles at some companies."

Comments

Better poor than broke.

[Troy H Parker]

300K may not seem like much, but at a time when many companies arn't making a dime, it's not bad at all, especially for a company with an "alternative" business plan.

Re:Better poor than broke.

[tim_maroney]

This quarter's profit is so slim that it doesn't say much of anything. Even under GAAP there's enough wiggle room in the accounting for a money-losing company to juggle the books and come up with a small faux profit every few quarters. In this case we're talking about a profit that is only 1.25% of revenues, well within that wiggle room. It's too early to say whether this is a real profit or creative bookkeeping; the next few quarters should give a much better indication.

This is great-or is it?

[Martigan80]

Well it is great news that a company how's business is solely about linux_is_turning a profit, and especially since they have been not struggling, but watching what they do. It is also good to see that they are doing this with out memberships or asking for more donations. What also helps is that their Distro is what many American business use, and what certification are measured against (some not all). Now is this good? After the 8.0 release I didn't see so many people praising Red Hat as with the 7.3 release. I see Red Hat push for a standardization in the Linux community, but it is more of "their" standards, not what the community wants. This is a double edged sword, good for them and getting Linux more coverage, but possibly bad for the community with a muscle like Red Hat who as we can tell is starting to flex a bit. Please tell me what you think on this.

Re:This is great-or is it?

[IamTheRealMike]

After the 8.0 release I didn't see so many people praising Red Hat as with the 7.3 release. I see Red Hat push for a standardization in the Linux community, but it is more of "their" standards, not what the community wants. This is a double edged sword, good for them and getting Linux more coverage, but possibly bad for the community with a muscle like Red Hat who as we can tell is starting to flex a bit. Please tell me what you think on this.

I think you're exaggurating :)

Actually I think RedHat got lots of praise for 8.0, especially considering it was such a big leap. Desktop unification was a brilliant move, and for distros that ship both desktops you can expect to see more of this in future I am thinking.

Redhat have been sponsoring (through Havoc) the desktop standards effort for some time now. The standards are hardly "theirs", they are developed in conjunction with the community and the only ties to Redhat are the fact that Havoc is the organiser and the mailing lists are hosted on a Redhat box. Redhat have never been about forcing control on people, far from it.

I personally think 8 is great, it looks extremely slick and professional and the admin tools are nicely integrated into gnome2. The fact that they're now in the black tells me it's going to be alright - the hype has passed, but Linux is still here and going strong.

Re:This is great-or is it?

[lunenburg]

Now is this good? After the 8.0 release I didn't see so many people praising Red Hat as with the 7.3 release. I see Red Hat push for a standardization in the Linux community, but it is more of "their" standards, not what the community wants. This is a double edged sword, good for them and getting Linux more coverage, but possibly bad for the community with a muscle like Red Hat who as we can tell is starting to flex a bit.

That would probably come from listening to drooling Slashdot fanboys whose only reaction to hearing the words "Red Hat" is "d00d!!11 r3d h@t si evil!!!! my Distro is more 31137 than j00!" or some other nonsense. Remember - you can't be cool" if you look like you're supporting the most popular thing. It happens with everything - the hip little bar downtown suddenly becomes "a sellout" and uncool once everyone discovers it. Same with bands, TV shows, etc. It's just very disappointing to see the Linux community turn on one of their own just to earn 31337-points. Shit-talking Red Hat just to show how cool you are doesn't help the Linux community gain credibility - it makes people think that the community is filled with a bunch of immature back-biters.

Nobody has ever come up with anything more than half-baked conspiracy theories to show that Red Hat is out to become "the Microsoft of Linux." The 8.0 release was a big jump in terms of functionality and overall direction. Some people liked it, some people didn't. There are lots of things I like, and several things I wish they'd have done differently. But business and technical decisions by a company whose product is open-source is not evil. I find it hard to believe that when you can take Red Hat 8.0, strip out a couple of minor packages, do s/Red Hat/MyUberDistro/ in the source code, and resell it, that Red Hat is the evil behemoth that people claim.

And do you know how Red Hat flexes its muscle? By GPL'ing nearly everything it produces, supporing the LSB, and employing people to work full-time on Linux, thus contributing their work back to the community for everyone from you to SuSE to Debian to use. Ooooh, how deliciously evil.

So I think that the only people who rail against the evils of Red Hat are paranoid conspiracy theorists who don't have the slightest idea of what they're talking about, and are only looking to score cool-points at Red Hat's expense. If Red Hat doesn't do the job for you, use their bugzilla or email lists and attempt to convince them to change things, or by all means use the distro that works best for you. But demonizing Red Hat simply because they happen to be the biggest and/or most
popular distro hurts all of us in the long run.

Quite impressive

[Lebannen]

I'm always impressed when relatively 'public' offerings such as Red Hat can turn a profit, really showing how important the business sector is. They may want free software, but they're more interested in low-cost software with some guarantee of support and an upgrade path. What I also found interesting was that those sale on advanced Server aren't actually sales - they're actually a subscription charge. 800-900 dollars for a year, product launched in May, and 1200 buyers (subscriptors?) by the third quarter - so that comes to just over $10,000,000 *if* they all pay a year's charges in advance. Not bad, and a revenue stream which will keep going year-over-year. Not bad at all. And I thought it was mainly online games charging subscriptions...

Missing zeroes

[KecCu]

According to the article, that should be $305,000 profit.

More important though, they will lower they prices:
"The average selling price of an Advanced Server subscription in the second and third quarters was $800 to $900 over a year, but it will decrease to $600 to $800 in the future, Red Hat said"

What I particularly like:
"overall gross margins were 66 percent"

Now there's a healthy company!

Good news

[dipfan]

At last, someone gets to the 3. Profit!!! stage.

There's a better Reuters coverage of the subject here.

Overvalued

[nuggz]

Redhat has 170 million shares outstanding.
A Market capitalization of 1 billion dollars.
$300k isn't going to cut it. (annually, quarterly, monthly or even weekly.)

Daily earnings of $300k would be decent.

1% profit on their sales is a little slim.

They've still got a way to go to justify their price

OK, now that they are out of the red...

[tsvk]

...will they change their name to Black Hat?

Red Hat Linux pricing: 7.3 vs. 8.0

[johnraphone]

Anyone notice the Redhat 7.3 prices vs 8.0 pricing?

Red Hat Linux 7.3 Personal - $59.95
Red Hat Linux 8.0 Personal - $39.95 ($20 cheaper)

Red Hat Linux 7.3 Professional - $199.95
Red Hat Linux 8.0 Professional - $149.95 ($50 cheaper)

Redhat 8.0 is actually cheaper than 7.3. Its pretty interesting if they will end up making more money doing this.

This is pretty damn good!

[wiredog]

$300k profit isn't tremendous but, considering that the third largest bankruptcy in US history has just been announced, it's not bad. Not bad at all.

Re:so what about unitedlinux

[teg]

If Redhat is pushing (or wants to push) the linux community towards more standardisation, why don't they join the unitedlinux effort then ?


The standardization effort is LSB. "UnitedLinux" is more of a marketing tactic from Suse than a standardization effort...


If suse, caldera, conectiva and openlinux can put aside their own goals

Two of these, caldera (openlinux is a product of them) and TurboLinux, are dead companies (as far as Linux development goes... their developers are gone). This isn't four companies pooling their efforts, this is SuSE desperately trying to counter Red Hat and signing up dead/severely hurting companies and give the impression of something more.

Jebus Fscking Chirstmas, time for a killing spree

[bogie]

You know how many times I heard these "Redhat is getting too big" comments since the 90's? Linux is free, GPL, and can't be "owned" by any vendor including Microsoft or Redhat. I'll tell you what I think on this...*?#!$@*!! up about it,and stop bringing it up!

Congrats RedHat, continue ignoring naysayers

[Ars-Fartsica]

In a down economy, particularly in the gutted software market, RedHat's move to profitability is a great sign.

This company has combined great a great technical staff with the ability to market and profit from products that differentiate them. I have not had any experience with the Advanced Server product, but as a RH8.0 user, I can say that the product is showing great improvements.

The linux market will not support a "Microsoft of linux" if that is your fear, the market for distros is very liquid, in fact, almost infinitely liquid. RedHat will only survive by providing true value above and beyond the hundred or so other distros that happen to be marketed at any given time, most of which are solid products in their own right.

THANK YOU.

[Ars-Fartsica]

The anti-Red Hat rants on this site are utterly baseless and sophomoric. If Red Hat were to exit the market, a significant force for the advancement of linux would vanish. Thank you for your post.

True, but potential market is enormous

[Ars-Fartsica]

I agree with you 100% about valuations, and if you read my journal, you will see at least twenty long rants about market valuations being out of whack.

That said, RH is potentially addressing a gigantic market. Even if 20% of Solaris and Win2k installs migrate to RedHat, thats in incredible jump in the number of installed cusomters with credible purchasing power.

I would confidently place RH in the same league as some biotechs in terms of market potential.