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Red Hat Is Now Part of the S&P 500

Posted by Soulskill on from the stock-build dept.

phantomfive writes "Red Hat has made it onto the S&P 500, an important measure of the stock market. It is replacing CIT, which is expected to go bankrupt after the government refused to bail them out. Red Hat is the first Linux company to make it on to the S&P 500. While this means little directly for the company, it is an indication of the importance Linux is taking on in the world."

18 of 128 comments (clear)

  1. Let Me Be the First To Say... by SilverHatHacker · · Score: 5, Funny

    Congratulations.
    Could this be the Year of the Linux Stock Market?

    --
    Funny may not give karma, but +5 Informative never made anyone snort coffee out their nose.
    1. Re:Let Me Be the First To Say... by jedidiah · · Score: 4, Insightful

      How else do you expect it to happen? Really?

      Yes. It just KILLS some people that Linux might be doing well or
      Redhat might be doing well. They will go so far as to even try to
      stir up some sort of artificial stock panic.

      Regardless of how some lemming might want to spin it, Redhat was
      slightly less important last week when compared to this week and
      this week they are a part of the S&P 500.

      Perhaps Redhat will be a little less subseptable to FUD now.

      --
      A Pirate and a Puritan look the same on a balance sheet.
    2. Re:Let Me Be the First To Say... by rtfa-troll · · Score: 4, Informative

      Well, after 2008, the year of the Windows.NET stock exchange, I think 2009 is already the year of the Linux stock exchange. At least it's clear now that people do get fired for buying Microsoft.

      --
      =~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
    3. Re:Let Me Be the First To Say... by burnin1965 · · Score: 4, Informative

      there are only 2 other major OS makers who are publicly traded, that are in competition to RH

      HPQ HP-UX
      ORCL Solaris
      IBM AIX
      NOVL SUSE

      Looks like Red Hat has plenty of competition. Red Hat's business performance selling support services for their distribution of linux has been outstanding and their inclusion in the S&P 500 is well deserved.

  2. Benefit of being in S&P 500 by SpinyNorman · · Score: 5, Informative

    There is a benefit to stockholders since being in the S&P 500 creates instant demand - it means that all the S&P 500 index funds need to buy your stock!

    1. Re:Benefit of being in S&P 500 by oldhack · · Score: 5, Funny

      Now the god damn commies are in my portfolio.

      --
      Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
  3. Index funds by andhar · · Score: 5, Informative

    Inclusion in the S&P 500 could mean some index funds will have to acquire some shares. Inclusion in an index is usually seen as positive, and falling out of an index is seen as negative, when index funds have to sell.

    --
    Vaya con huevos, my darling.
    1. Re:Index funds by larry+bagina · · Score: 4, Interesting

      Owning Red Hat stock doesn't make linux happen. When you (or the index fund) buys RHAT stock, that money goes to the previous shareholder, NOT Red Hat.

      --
      Do you even lift?

      These aren't the 'roids you're looking for.

    2. Re:Index funds by Meshach · · Score: 3, Insightful

      Owning Red Hat stock doesn't make linux happen. When you (or the index fund) buys RHAT stock, that money goes to the previous shareholder, NOT Red Hat.

      Not directly. But as more people buy stock in RHAT it means that Red Hat will be a more viable business and more people will put money into it. So indirectly Red Hat does get money.

      --
      "Maybe this world is another planet's hell"
      Aldous Huxley
    3. Re:Index funds by cetialphav · · Score: 3, Interesting

      Owning Red Hat stock doesn't make linux happen. When you (or the index fund) buys RHAT stock, that money goes to the previous shareholder, NOT Red Hat.

      That is true, but there are tangible benefits to RHAT. One of the ways they can raise capital is to issue additional shares. An increase in the stock price means that they can raise more money when they do this. This also makes the stock options that are offered to employees more valuable without costing the company a cent.
      It also protects the company from a hostile takeover since any buyout becomes more expensive.

    4. Re:Index funds by tnk1 · · Score: 4, Insightful

      Yes and no. Directly, no effect on Red Hat.

      Indirectly, Red Hat probably has a stock reserve that it maintains. Improving the price of their stock means that they can actually buy things with that stock, usually this is in the form of acquisitions. Many buyouts are done in the form of stock swaps.

      Additionally, it makes their stock more attractive to give to employees/executives because its not some fly-by-night operation any more. Not that it was before, but some people like their certifications and industry recognitions.

      In the end, it could potentially have a net positive effect on Linux, particularly if they use any advantage in a way that will help Linux, either directly or incidentally via side-effects of their corporate strategy.

      A lot of what-ifs, but in the end, its nice to put a capstone on Linux success in the business world.

    5. Re:Index funds by dfn_deux · · Score: 3, Insightful
      Also, being included in the S&P500 means that the increase in demand created by the associated index fund inclusion will (or should in theory) increase the per share value which has the resultant effect of increasing the over all value of the company as represented as the market capitalization. Larger market caps allow for much more leverage when negotiating financing on large business deals; not only by giving a greater perceived value but also by providing for more favorable rates on direct equity exchange deals.

      P.S. I am not an economist and what I've posted above may be completely wrong... I'm working from very old memories of a 100 level econ course I took a long long long time ago.

      --
      -*The above statement is printed entirely on recycled electrons*-
    6. Re:Index funds by prichardson · · Score: 3, Interesting

      Not directly. But as more people buy stock in RHAT it means that Red Hat will be a more viable business and more people will put money into it. So indirectly Red Hat does get money.

      Having a high stock price does not mean you have a viable business. Please remember the dotbomb bubble. Many businesses had completely ridiculous business plans yet their stock went through the roof. Then they ran out of money and the stock certificates were about as valuable as scratchy toilet paper.

      I'm not saying this is true of RedHat, but PLEASE don't equate a high stock price with a viable business. If anything, a high stock price equates with the mere perception that the business is viable.

      --
      Help I'm a rock.
  4. de-spin by girlintraining · · Score: 5, Informative

    Red Hat has made it onto the S&P 500, an important measure of the stock market.

    First, the S&P members are selected by committee, not by merit alone. Companies are (usually) included because they have a high liquidity and are "representative" of their industry. Not that Red Hat being selected isn't good news, just understand they're not selecting it because of the "runaway success of Linux", but because Red Hat is representative of the overall health of this segment of the industry.

    --
    #fuckbeta #iamslashdot #dicemustdie
    1. Re:de-spin by morgan_greywolf · · Score: 5, Informative

      For Red Hat to be representative of their industry, they need to be a healthy and profitable company. While I agree that this doesn't necessarily point to Linux as a being a "runaway success", it is significant to note that Red Hat's flagship product is a distribution of Linux and the various open source tools from GNU, X.org, Gnome, X.org, etc, and that their other products that help to boost their profitable, like JBoss are also open source tools. So yeah, it's a big win for open source because it shows that you can make it to the S&P 500 by being an open source company. That puts things in proper perspective.

      --
      My blog
  5. Finally! by Anonymous Coward · · Score: 3, Funny

    2009 - the year of Linux on the stock market

    Next milestone - the desktop!

  6. Red Hat bully customers ? by viralMeme · · Score: 4, Insightful

    "Red Hat .. bully customers just as well as other non-Linux open source companies, so good for them"

    Where, how, please provided verifiable citations.

  7. CIT and moral hazard by benjfowler · · Score: 3, Interesting

    Congrats on Red Hat reaching the big league. I've got a couple of mates who work for Red Hat, and they say business is booming in the downturn, because they're picking up a lot of business from people looking to save money through Red Hat's Open Source-plus-support way of doing things. I wish Red Hat luck.

    Sadly, this doesn't seem to have been the case with CIT, whose criminally incompetent management decided that letting the Government bail them out, was a better business plan than running their business as a going concern.

    Too bad Anglo-American culture is far too tolerant of failure, particularly in the business world. The fat cats need to be taken down a few pegs -- and serious repercussions for failure are needed.

    The big problem with the government bailouts on both sides of the pond, is that the captains of industry are scum, by and large; and will find a way to be "too big to fail", and profit by bludging off people who pay their taxes and do the right thing. Thankfully, the chaps in charge in the US have let CIT fail. After all, private business are full of people who preach the benefits of free markets in the good times. The Obama administration are wise enough to allow them to be destroyed by the remorseless logic of the free market when they are too weak to survive.