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Red Hat Releases 2nd Quarter Financials
Booker writes "Red Hat, Inc. has released their 2nd quarter financial results. You can see the press release here. Operating at a loss, but then we all knew that would happen for a while. Revenues up 95% over last year.
Kinda ironic that an Open Source company has to join The Man on Wall Street before their balance sheet becomes publicly available. :)
They do it like you do, they dip into the savings
account. Its just that by selling a lot of stock
you can put money into the savings account.
Obviously a company can't loose money forever.
The savings account will run out eventually.
Geezus, another graduate of the Howard Stern university of Critical Thinking, eh?
Fluctuations in the market price of a stock after the IPO do NOT affect the company, only the holders of the stock. If their stock goes down, the haven't "lost anything to the fickle market".
They have cash. People paid cask for stock. RedHat keeps the cash. The market is full of people who are trading $14 stock certificates around for $109 who either make or lose money based on what they buy and sell the stock at. Bob Young may personally care if the market drops, but it doesn't have that much affect on the day-to-day running of the company. The rate at which they can get additional debt may go up.
If the stock price dropped to $0.02 tomorrow, RedHat would still have $14 x (however many million) shares. There would be hell to pay over at Goldmann Sachs, but that is a different story.
Right.... but the ironic thing (well ok, maybe not so ironic) is that an open source company had closed books. heh... heh.... oh, never mind. :)
yo
Not true - it is possible to sustain a business with a positive cash flow in the absence of loss or profit.
Companies don't pay dividends (from profit anymore), the reason is that cap gains are taxed less than dividends. I don't know why. Seems like wages and dividends should be taxed at lower rate but the big guys make the rules we gotta play by.
Ahh, I love it how everybody's favorite example of how profitable open source can be, now becomes "we all knew that would happen for a while."
Either the market will get upset and hammer the stock price or Red Hat will make more and more money. I think it will be both but just you wait for Microsoft to announce MSLinux (sometime in the vague future, of course) and stockholders will panic. Most of the people who bought at the IPO aren't holding for the long term.
But that's not enough if you're running a mission critical system, and you're loosing millions every hour it is down. In that case you'll be willing to pay quite hefty sums to have someone guaranteed to be accessible for you.
Maybe they won't fix it, maybe you'll have to resort to the online community. But if you loose a million an hour, and that accessibility saves you an average of 30 minutes of downtime a year the support agreement has to be damn expensive not to be worth it.
How do you think IBM Global Services earn their money, for instance? Certainly it should be cheaper to have your own in house experts, so nobody should be interested in their services, right?
As for selling CD's, how many DO need support? I've bought several RedHat CD's, and never ever called them, and I'm sure there are lots of people like me. I've bought it because it was convenient. You can call that stupid if you will, but people still buy their CD's, and I'd rather buy the official boxed set than a copy any day. If you look at their financial statements, you'll see that their revenue from CD sales are actually increasing dramatically.
As for Red Hat turning a profit... It has. And there's no reason why they won't do it again. But not short term. After all, they did the IPO for a reason: Money to expand their market.
If the losses had been operating losses (that is: that they could be directly correlated to their sales), they it would have been a disaster. Since they're financing rapid expansion, however, it is not. They're opening new offices, aquiring assets from other companies, hiring lots of new people for business development, to build their consulting business, etc.. In effect they're building a completely new business on top of and based on, their existing business.
Of course, they still have raising expenses related to the CD sales, but I'd expect that to be small compared to the rest.
My bet is that they cover a lot of new users, and experience with new users show that lots of them stick with the first thing that hits them (jfr. the amount of people who leave Netscapes homepage as their default, and that let Netcenter grow so incredibly fast)
RedHat is reducing emphasis on their CD production, and shifting their focus to services and to their website. That's where they spend most of their money. Look at their past financial position (in their SEC filing): They've been close to balance, and actually made a profit in a couple of quartes, which is incredible for a company experiencing the amount of growth they do (growth cost money, you typically get the rewards of it when the growth rate slows down).
wtf - isn't the fact that the value of RH stock went from 10 to 120 bucks per more than 95% increase in corporate value..? Sounds more like 1200%increase in value to me..
the man is in washington, not on wall street.
Yes, I am as serious as serious can be. Open source is fun, money is more fun though. My current guess is in two years time at most.
Gee, if you figure it out let me in on the secret. Damn but the federal gub-mint operates at a loss (defecit of revenues-expenses) for decades and it doesn't seem to bother them. You keep borrowing money as long as suckers/banks/taxpayers/investors are willing to keep giving you money. Just ask Alan Greenspan.
Magnitude of loss was unexpected by the "pros".
After having read the link above I'm not sure what you are trying to say. Should we discount Linus' opinion when he lists none of the 'Ubergeeks' as core Linux kernel hackers? My reading of the article (YMMV) is that he was not asked about RedHat kernel hackers, neither was the article about RedHat (only that section). He was simply asked wether he could list the 'top kernel hackers' he trusts. 3 out of the 4 people mentioned work for RedHat, it seems. (This is a good sign I think! All of them are still contributing to the GPL kernel full-time, maybe they can contribute even more than before?) If someone then Linus should know who is contributing to the Linux kernel on a daily basis and who is not.
Let me just jump in here before the dicussion gets too rough :-). Here is the full quote from the original article you snipped:
(begin quote)Core confidants
Torvalds insists any attempt to list his core confidants will be incomplete and will likely offend someone. That list, however, would have to include:
- Alan Cox, in Swansea, Wales, who probably has the most influence on Linux of anyone besides Torvalds. Torvalds calls him a "second Linus."
- David Miller, of Durham, N.C., who controls many networking aspects of the kernel.
- Stephen Tweedie, of Scotland, who develops Linux's virtual memory and file systems.
- Another developer, in Hungary, has driven SMP development in Linux.
Torvalds said members of his round table of confidants in turn have collections of developers they trust. Anyone can propose or try to enhance the kernel, but real material change usually comes through this chain.(end quote)
Your interpretation of these paragraphs is curious, at best. Look at the part about 'someone in Hungary', it clearly shows that the author simply did not have enough time to write down Linus' (incomplete) list or did not recognize the name from the tape recording. If the author of the article knew what list he wanted to ask, he surely would have known all the names. The list is declaredly not exclusive, so it could as well include your favorite pick of kernel hackers. The above one does not - I'd suggest you to get over it, it's not the end of the universe :-).
If you do not believe me, go take a look at this LinuxCare kernel development traffic-analysis, it shows that SUSE and Red Hat kernel hackers are pretty active. linux-kernel is the primary kernel development mailing list, all active developers are posting to it, because Linus several times declared that he prefers (mandates?) discussing all major Linux kernel issues on linux-kernel. In the 'top posters' stats you can see all the people mentioned above, plus contributions from SUSE, Transmeta, the academic space and many other companies. The suggestion that this is just some sort of manipulative M$-ZDNet cabal, is, uhhm, rather childish and does no good to Linux, really.
The price people are trading stock among themselves has no direct relationship with the 'value' of the company itself. The company does not 'see' this money. If I buy redhat @ $1, and sell it to you for $50, redhat doesn't see a dime. They make their money off of IPO, and off of selling reserve stock as the company grows.
in Washington calls the man. When you're all grown up you'll understand. Now it would just confuse you.
But it's considered successful. I just don't get it.
Making money from selling stock ?
Ha, that's funny - eventually they have to start turning profit or the whole thing is simply a joke.
Yep. You are right. I was wondering myself, since I rarely go to their site.
They will call it "based on RedHat" and it will sell just as well...
I don't see much future for RH.
I think it's rather silly to measure the 'kernel clout' of Linux companies, but you since have raised the point: Red Hat appears to 'have' the #2, #3 and #4 Linux kernel hackers 'on board'. (Alan Cox, David Miller, Stephen Tweedie) #1 is Linus Torvalds. (see this article where Linus lists his current 'top helpers'.) So it's a little bit more than 'some' kernel hackers. In the last couple of months Stephen Tweedie brought us ext3fs, raw devices and asynchron IO, David Miller has SMP-ized the networking code and buffer cache (not to mention the UltraSparc port), and Alan Cox, well I guess I dont have to introduce Alan Cox :) These contributions are all 'paid' by Red Hat. My question to you is, what kernel-improvements has VA Research funded in the last couple of months, what features have those 'Ubergeeks' contributed that will be present in the 2.4 kernel?
Again, I did not raise this silly point, it was you. But lets really consider the facts. (ie. source code) Lets bring out the code, lets improve Linux as fast as possible and everybody will benefit. And just forget the PR.
Hmm, Mandrake does, FreeBSD does, Debian does, but Red Hat... Uh.. Red Hat who want's to "bring Linux to the Desktop" doesn't?
Sorry, but, someone had to say it.
Sheesh. Where's rabbins when you need?
Werd.
I translated from this release that the .09$ a share loss does NOT include the income from the sale of the initial shares? I know that the 110+$ a share they are now doesn;t give them money, but certainly they earned money from the IPO itself.
-- I'm the root of all that's evil, but you can call me cookie..
I just hope that within the next year, they can at least get to breaking even. I truely hope they don't follow the trend of all of the other .com stocks that people seem to group them with with. Beside's, I'd like to see how high the stock would go if they actually posted a profit.. ;-P
-- I'm the root of all that's evil, but you can call me cookie..
So, they take in $96M * 0.65 of capital for business development, yet still manage to run a loss twice as large for revenues twice as large. And its not like the cost-of-goods-sold includes a gigantic investment in development expense. Is the objective to continue to increase revenues until the loss fully matches?
Irrational exhuberance comes to mind. Cygnus Support/Solutions tried this model as well, and while they have made money, I wouldn't underwrite the IPO. Remember that underwriters work for the fees (7% of issue), not because of any great belief in the product.
WHy should they make a profit? Profits in this country are taxed, and heavily, certainly the stock holders don't give a rat's ass whether the stock is profitable because they are only holding it for the short run so they aren't looking for a dividend pay out. So why should RedHat show a profit, no shareholders to please (other than the ones that already know this) and no taxes to pay.........
Funny and I thought Perl == Paid employment recently located
Doesn't really have anything to do with the trial, it is unique coincidence but these things typicallly fall on a business calendar, that is they have to post on a certain date because of when their quarter ends etc............. Besides who cares about the final arguments, I am waiting for a decision.
Funny and I thought Perl == Paid employment recently located
Nope they don't ever have to, only if they want to use the open market as a way to generate financing. Goldman Sachs jsut finally this past year went public, and they have been around a while. THere are a number of fairly large companies that are still private, look around you might be surprised. Going public takes financial strain off of the owners (assuming the company does well), and in today's world is almost crucial to call yourself a real player.
Funny and I thought Perl == Paid employment recently located
One-time losses such as purchasing another company are generally not counted against a company financially.
i.e. if Amazon buys someone else, they don't have to count that one-time expense as a loss when calculating their yearly expenses.
But what about the possibility of consulting services? In this feature on the 30th anniversary of the internet, the point was made that IBM makes a slew of money on consulting and that Linux companies could as well:
RedHat would be silly if they just relied on sales and support of their distribution. If they are able to obtain a name for themselves, they can get in and be the leading Linux consulting firm able to step in and set up a network infrastructure or what have you better than any "in-house Linux expert" might. And with co-operation from other computer companies, Red Hat just might be able to get you a deal on workstations.
ian.
ian
I don't want to be a nay-sayer here, but as a member of the linux community we have a serious problem of DIRECTION. Here we have a large company sticking its neck out on the line based on the hope that in the future they will be able to provide service and support to their linux distribution. Service and support indicate corporate users. Not many end-users, or geeks, are willing to shell out money for a support contract, especially when you can go to Deja for free. But we have numerous technical debates and write-ups that linux is not keeping up in the high end server market. So why would I, a corporate user, use linux at work for a production server?
This argument is going to really plague RHAT and its investors as the true market for linux is explored. RedHat is lining itself up to have a great number of home and campus users using their product and supporting THEMSELVES online. I hope our friends don't get burnt on IPO stocks they have purchased.
It takes a lot of money to run a software company like RedHat and the 50$/license is paid by the consumer in the end anyway.
I cannot imagine Dell making a Linux dist but it wouldn't be a big deal for IBM.
I think we have enough Linux dist's out there already so I hope each hardware vendor doesn't create a separate one. can you imagine the confusion?
Stock prices have no direct relationship with how much revenue a company is currently taking in. In reality, a stock price represents the average value of the company (in profits/assets/etc) the stock holders expect the company to achieve over an average period of time. For example, if I owned NDOG stock at $92 and I thought the company was going nowhere and would eventually go under, I would short (sell). However, if I feel that NDOG was going to dominate the market in 5 years and become 5x more profitable I would probably invest more, even if the company was currently lossing money. The fact that RHAT's stock is worth so much while it is lossing money just means that people see RedHat as on of the major contenders in a rapidly growing Linux market in the future. Because RedHat is so widly used and because of the partnerships RedHat has made, I don't expect RHAT to drop much as other Linux companies IPO.
just my $0.02
\forall code \in C, \frac{\Delta readability(code)}{\Delta t} < 0
Uhm so with this odd buisness model, has the RedHat corp. EVER had even one single profitable
quarter?
da'fly
Because they flat out say they're not going to make money in the forseeable future. Instead, they (amazon) are expanding and diversifying in their hopes of being the Wal-mart of the web.
IF investors were expecting profits from Amazon, then they'd be out of business by now. Instead, they're just waiting for them to stop buying up other companies and instead report it as profit.
Why can't IBM or Dell just roll their own distro based on Redhats, and then not have to pay any $$$ to Redhat? It's only a matter of time, when Redhat (or maybe Debian) is used by other companies merely as a reference platform, who then use their own distro's... It's going to happen. As more companies start compteting on the Linux front, they're going to start needing to lower prices more and more (according to redhat's site, last time i looked, it was $50/PC to distribute their software & manual as an OEM)... Once one company starts rolling their own to skirt the costs, others will follow, leaving Redhat with what?
Nothing...
Perhaps they should just ship their CD's for free, manuals for $10 or $20, and support for $25/call. That way, no one will try to do that to them... They'ed technically be a support company, giving out the product as a lead-in.
I don't get how you call year six a jackpot. You've accrued 31 units of debt, and even after year six you're *still* 12 units in debt, call it 15 with interest on the debt.
I think the way that companies like this actually manage is venture capital -- people who are willing to get a pre-IPO ownership stake in exchange for meeting the operating capital needs of the company. The risk is that the company may never become profitable and their ownership stake is worthless. The benefit is that $10M invested now may yeild $1B tomorrow.
Someone could possibly make a nice business by becoming known as "The" Linux installation and support company. Instead of a Dell wasting all the money to do install RedHat in-house, just outsource it and the support to a company which specializes in tailoring any distribution and configuration for the particular computer sold. They could undercut the licensing fees of the RedHats and Calderas of the world by, say 50 percent, and still make a profit because they wouldn't have the Research & Development costs that those companies have. I know LinuxCare's there for the support, but I don't know whether or not they do the whole enchilada that I'm talking about.
Cheers,
ZicoKnows@hotmail.com
Say MSFT were a suburban resturant that had annual earnings of about $173,240, or $554 on an average day. That would make Red Hat a lemonade stand with annual earnings of $176 or $0.56 a day (given everyone works 6 days a week).
If you were and independent investor, who would you throw your money at? This better be the best damn lemonade in all of christendom...
Hmmm...ok, a stand that sells protein drinks that are out of this world: they come in any flavor you want, from pasta to saurbauten and moon cake to rice pudding, as filling as any regular meal, and, AND allow you to achieve the weight and health you always wanted, but couldn't find while spending all that money at MSFT's.
I'm stretching here. Help me out.
Nobody knows everything about every possible situation. If something unprecedented goes wrong Red Hat isn't going to be able to snap their fingers and fix it.
The online community is far more useful than any isolated professional support, and you only need a computer staff clued-in enough to access it.
This isn't a good comparison to be making between MS stuff and Linux from a user's viewpoint. Linux-based software compared to MS-based software isn't like a glass of lemonade compared to a full, if poorly prepared, menu.
OTOH, if the restaurant is under inspection by the health department...
"The revenues they have now are a mix of Linux-boosters who are giving charity
and ignorant people who don't
understand that the software is free. "
In the last 4 years I've spent $45 on
internet software. And that was a book called
"Internet Programming". The included disk had
everything I needed to get started.
I've just downloaded everything I've needed since.
So yeah, how are any of these companies making
money?
um... Lucas wrote:
"Why can't IBM or Dell just roll their own distro based on Redhats, and then not have to pay any $$$ to Redhat?"
I can think of two reasons:
1) Brand recognition. Red Hat won't let them use their brand name for free. Since Dell, etc. want their customers to feel comfortable with the linux distribution included, it would make sense to use the most recognizable one, rather than creating their own. I'm sure the licensing costs won't come anywhere near the M$ tax for this.
2) Competence. They would have to hire a group of programmers/software engineers to put together and maintain their own distro, even if they just re-package the Red Hat distribution, since Red Hat obviously wouldn't be supplying the support. I'm pretty sure they don't want the headaches associated with this. Cheaper to pay Red Hat.
Regards,
Bun
"Anyone that has ever gotten an idea based on any of my work and done something better with it-good for you."--J.Carmack
No large company I know would trust an "in house expert" to know everything about every possible situation. Forget Linux, this is true of any system. These companies want to know that there is someone on the other end of the phone that can give them an answer when their inhouse expert doesn't have one.
A *very* large company like IBM or Dell could do that, and possibly be very sucessful at it. A smaller company might just use RedHat's software and provide their own support system. It's not really in any hardware vendors best interests to do the former, however. A hardware-based company does itself a disservice by spreading it's resources thin dealing with software issues. Linux (and actually all OSS) support is sticky business for companies. They don't really know what to think of it at this point. Is it reliable? They aren't sure, because it hasn't really been tested to any extent. And they're worried about having to deal with the support themselves because naysayers keep telling them that it's impossible to do that with the software continually changing at irregular intervals. Well, we know that a lot of this is fud, but the companies are wary even still. So, what's the solution? Pay another company (like RedHat) to deal with it. Let them be the Linux *experts*.
However, down the road, if RedHat continues to grow as the #1 commercial Linux vendor (at least, here in the US) they may be able to pull that sort of thing off. I make no claims as to whether this would be a good thing for them or not.
RedHat is seen as the name brand in Linux distros of the US. Companies like Dell and Compaq love brand names because, with them, comes customer recognition. When these larger companies start making deals with RedHat to bundle Linux with their server/desktop/workstation, RedHat will start turning a profit. Of course, this is already happening, but RHAT is still at a loss because Linux has yet to receive the mass recognition as a viable product yet. It's getting there, but it still has a little ways to go.
Judging from Red Hat's stock performance, it looks like the business community is taking Red Hat (GNU/Linux) seriously!!!
As Red Hat gets closer to actually making a profit, the typical investor starts to panic, seeing an actual P/E (or trailing P/E) ratio of astronomic proportions.
I just want it to drop so I can buy a few thousand shares. $40 would be nice, but under $70 would be ok.
Will in Seattle
To yank down $70 million in cash for the company, and untold millions for the executives and past investors?
That sounds like a good reason to me.
... words of wisdom.
Most people simply do not understand that price does eventually correlate to actual earnings. They simply see a stock that has done very well and it sounds like a neat company that could run Microsoft out of business.
The advent of investing on the internet has encouraged a lot of uneducated decisions in recent years... fortunately the market has been such where they have not been too hurt yet.
It was never spectacular, but they were making money for a while.
If that were true, you could argue that the majority of your non-operational expenses were one-time and therefore should not count on the financial statements.
>> I don't get how you call year six a jackpot. You've accrued 31 units of debt, and even after year six you're *still* 12 units in debt, call it 15 with interest on the debt.
Well, OK, you're right: in year 6 we're turning a strong profit, but the total balance is still a loss. However, if you expand the "etc" in my table out a couple of years though, your total balance is still a big gain. Optimistic? Yes, but that's the nature of the public's valuation of RHAT (and LCPBB).
Strictly speaking, there is no interest on the debt (remember, I'm Bob Young and this is spare change for me). I'm not taking out a loan, but there is the "opportunity cost" of not investing that money somewhere else (like FCOJ futures). Also, if I raise money via an IPO or a venture capital arrangement, there's no interest either - the investors are not loaning me money, they're buying part of my company.
Slashdot is entertaining like pro wrestling is entertaining
Dell releases their earnings every quarter, and growth is always astronomical. What happens to the stock? It tanks! Straight down the tubes. So business is great, we're earning money hand over fist, and what is the stock doing? Plummeting. Make sense to you?
No company is "forced" to IPO. It's perfectly acceptable to stay private forever. The purpose of an IPO is to raise money for the company by selling stock to the public (at the IPO price). This money fuels marketing and company expansion.
However, it means the company gives up control to the public shareholders (represented by the board of directors), and all future actions are accountable to the public shareholders.
Worth $7.4B? Only if you believe they will growing at an enormous rate, with revenues growing 100%/quarter, and huge profits to follow.
Some shareholders are believers. Most are subscribing to the "bigger fool" theory that says there is always somebody who will buy the stock for a higher price later even if it is rediculously valued.
RedHat can't possibly live up to the hype and stock price. They are destined to fall, but when? Ahhh... If you only knew, you could make a fortune...
Companies can operate at a loss for as long
as they have money or liquid assests. When they
run out, the company goes backrupt.
Startup companies get money from Venture Capitalists for a share of the company (or borrow money). When it runs out, they need to ask for more, or IPO (or be making a profit).
The whole point behind an IPO was traditionally to get enough money to fund a companies growth (allow them to spend more money than revenue for a while, to grow the business). IPO has instead become a way for investors to get rich quick, although it still serves the purpose of funding the company.
When the money RedHat got in the IPO, plus any reserves they had from before, run out, then RedHat will either need to be profitable, need to find a buyer, or go bankrupt.
So, the IPO money is the "savings account" they are dipping into, and it better not run out before they find some way to earn a living!
I agree with some of your post, but "it's obvious that pretty soon they're going to be making money hand over fist" doesn't fit my understanding.
Most of RedHat's profits will come from services (Linux can be copied for free, right?). Growing a services business is slow and difficult (you need to hire many hundreds of linux experts, and find work for all of them).
Linux is a hot buzz word in the market, but most shareholders don't understand RedHat's business.
Why in the world did the people at Red Hat file their IPO? I really don't have any financial education of sorts but isn't it a requirement eventually for any company? If not why did they even risk it. They could have made a great deal of money and not have lost anything to the fickle market.
Slashdot social engineering at it's finest
Disclaimer: I own a bunch of RHAT stock (purchased way above $14 :( ) so take all this with a grain of salt...
;)
Why does RHAT have such a huge valuation? Simple. The total future size of the Linux market is unknown (and therefore, from Wall Street's point of view, close to infinite) - thus justifying virtually any valuation you'd care to put on Red Hat.
We've seen this phenomenon before with Internet stocks. Who knows how big the market for fubar.com will be? So the stock goes through the roof!
But when a market gets some bounds around it, WATCH OUT. A company in a mature market where we have some sense of the ultimate market size will have much lower valuations.
ps: now's a great time to buy more RHAT stock!
Remember that people are supose to invest in compainies becuase the investor believes the company can do well and wants the company to use their money to do well regardless of what the company is worth. Today we think of investors as daytradin freeks with no loyalties to a company. Apparently a lot of people want Red Hat to do well or they just wanted to get rich quick. :)
There are two components to a "loss": an accounting net loss and a cash net loss. A company might lose money for accounting purposes, but still not be losing that much cash on the operating side. (For example, because much of their loss is caused by non-cash compensation expense, or amortization of goodwill).
Now a company like Red Hat is probably burning cash at an amazing rate in order to build up their business. To keep this up, they need to get more money through financing activities such as selling bonds or stock. Hence the IPO. They tell the investors that they plan to use the money to invest in the business, which at some future date will result in incoming cash flows from operations that more than make up the invested cash and/or allow them to service their debt. So long as they can keep getting people to invest money in their company, they can keep running losses.
The Motley Fool has a saying on their website concerning P/E and growth:
"In a fully and fairly valued situation, a growth stock's price-to-earnings ratio should equal the percentage of the growth rate of its company's earnings per share."
I don't believe that the market always accurately specifies the value of future earnings, for exactly the reason outlined in the quote above. Those who buy at low PEG ratios and who short at higher PEG ratios are making their stock moves on more than intuition. This is more than I can say for the people buying and selling RHAT like its going out of style. =)
Let's try not to let fact interfere with our speculation here, OK?
A $3.1 million loss would be fine and dandy if it wasn't for the many closed source companies not posting $3.1 million losses, with not 8 full time developers but 50. In fact the existance of other companies making profits makes it hard to connect a $3.1 million loss with wide acceptance of open source software. What I see is RedHat spending enourmous amounts of money on PR and CD printing to get a very large amount of users to try it, but they're not retaining users and while they spend lots of money on the basic system, they're doing nothing to create productivity applications, further aggrivating the high turnover rate.
I suggest you reread the article.
The only quote in that article that claims to involve Linus' words says:
The authors of the article indicate (but do not quote him directly) that
What this says is that Linus listed nobody as ``core confidants.''
Not Alan Cox, not Stephen Tweedy, not Donald Becker, not Ted T'so, not anybody.
Apparently Scott Berinato decided that since Linus declined to provide a list, and despite the fact that Linus indicated that such a list would be likely to be offend people (as well as to confuse anyone that doesn't read carefully to realize that this isn't Linus' list ), he decided to make up his own list.
The three people you named (plus some unnamed developer in Hungary) is the Scott Berinato's List of People He Guesses Might Be Amongst Linus Torvalds' Confidants.
It is not the Official List of Linus' Kernel Confidants.
It's not me that looks silly when you draw conclusions based on some guesses made by some writer at Ziff Davis...
If you're not part of the solution, you're part of the precipitate.
That means that you don't pay any tax (generally speaking) until you sell the stock. And a dollar of tax deferred represents some portion of a dollar of tax that is avoided.
The rate of taxation on the gain doesn't matter nearly as much as the fact that it is deferred.
It might sound like a neat idea to force stock to be revalued annually, thereby crystallizing gains (and losses) for them to be taxed.
On the (by some theories) upside, that would, by now, have forced Bill Gates to both pay a whopping big tax bill of on the order of many $BILLions of dollars as well as to sell off the vast majority of his holdings of MSFT (in order to pay the Tax Bill).
The "Bill Gates" scenario display ways in which it is not so good; it effectively represents the government grabbing, as if it were income, parts of any sort of "increase in value" of an enterprise.
Another disadvantage is that "continuous revaluation" requires having a department that are constantly attaching values to things. There are lots of opportunities for horrid Unanticipated Consequences.
If you're not part of the solution, you're part of the precipitate.
In an article over at ZDNET, they are talking about the IPO for andover.net, which is (according to ZDNET) the parent company of /. How much money are our various ramblings here worth? I had the impression that this site made a few bucks, but not a fortune.
Dog is my co-pilot.
...why? Before they were private. That's how it works. Once you go "public", you have to release certain financial info quarterly. Duh.
has the RedHat corp. EVER had even one single profitable quarter?
If you look at their SEC filing, two of the five quarters listed therein were profitable. In fact, right now revenues have been going up considerably too. "So, where's all that money going, then?" you ask...
Expansion. They're sinking a lot of it in expansion right now. Go read some of the news items regarding them in the past few months. Think of it as them taking out a loan from themselves to make an investment in their own future.
I think you may also find this comment educational: Re:Economics question.
Berlin-- http://www.berlin-consortium.org
DNA just wants to be free...
OK, time for me to play total finance newbie: Could someone explain in a reasonably simple fashion, exactly how a company can operate at a loss? What the mechaincs of "We're a great company, we keep losing money!" are? The company I work for (10 people) can't operate at a loss. If there is a higher payables than receiveables, we have to dip into the savings account. If we get paid late, then we can't cash our paychecks until we are paid by our clients. And its not like we are doing small business, but I think in the eyes of the business world we live hand to mouth..
ZOMG I WOULD LOVE TO KNOW ABOUT YOUR FEELINGS ON MACINTOSH VERSUS WINDOWS, VI VERSUS EMACS, AND HOW YOU'RE NOT A DORK
"Increased acceptance of the redhat.com Web site as a leading destination site for communications within the growing open source community. The site had 33.3 million page views in the second quarter and has begun carrying paid advertising."
Not to slam anybody's web site, but since when has redhat.com been a community for open source minded people? I visit redhat.com occationaly, but only to go to their errata list.
Am I off base here? Who here goes to redhat.com for open source community related things?
"Red Hat's Web site, redhat.com, is a leading online source of information and news about open source software and one of the largest online communities of open source software users and developers."
Can somebody please validate/debunk this? Since when does someone go to redhat.com over slashdot.org or freshmeat.net?
I'd like to see redhat do well, but I am afraid they are setting themselves up for a big disapointment on the portal idea by counting hits on their site for something they are not.
This sig is false.
Very true, and I wouldn't want to argue that Red Hat is worth $7.4 billion at the moment. On the other hand, Red Hat does have approximately 100% year-over-year revenue growth. They can't keep that up forever, to be sure, but six years of that would give them about $1 billion in annual sales, earnings of over $100 million or so, and a stock value within shouting distance of what they have today.
So, what's the value of those future earnings? Whatever the market says it is. :-)
King Babar
Babar
Foogle pointed out that claims like "Works with RedHat" and "RedHat Linux Compatible" are going to be increasingly important as companies continue to affirm the importance of Linux in general, and usually RedHat specifically.
...)
In the differentiation game which RedHat and others are going to have to keep playing if they are to survive, this is one thing that having the best-known brand name will make possible.
Does RedHat currently charge for such use, and if so, to what level of Compatibility do they ensure? Or do they charge for software but not for hardware, or vice versa? (I can see some arguments for that sort of arrangement
Insight appreciated!
timothy
jrnl: http://tinyurl.com/c2l8yr / foes: http://tinyurl.com/ckjno5
Companies that appeal to the advanced user (i.e., hacker) would use such a tactic, because obviously a hacker wouldn't have much trouble playing with his new Linux box (not that most such individuals couldn't put together their own, anyway).. However, companies like Dell try to appeal to the average end-user, not the hacker.. Therefore, including official documentation, an official CD with the Red Hat distro on it (not unlike they do with Windows), and being able to tell the consumer that they have official support because it is the official product seems the way to go..
~ Kish
RedHat may be at a loss right now, but I think it's obvious that pretty soon they're going to be making money hand over fist. The Linux market is booming and companies like Dell and IBM are just itching to make deals with Linux companies. RedHat in particular it seems. I'll wager that we're going to see even more items that are labelled as "RedHat Linux Compatible" or "Works with RedHat Linux" as this trend continues. It's not a bad thing, per se, but RedHat is certainly going to have a lot of clout, as they come into more money to throw at Linux application/kernel developers.
Disclaimer: I don't know anything about how to run a business, don't own RHAT stock, and don't track their activities, so please be very gentle with me. :)
I always thought that the way Red Hat would make its dough was by signing deals with major computer makers.. After all, they could download whatever Linux OS they damn well pleased, and most would want to put the most popular distro on their computers. However, without permission from Red Hat, they are not allowed to call the distro on their computers Official Red Hat Linux. Therefore they would have to sign a deal with Red Hat that allows them to use the name. If Red Hat was smart, they'd charge the big bucks (or at least enough to make a profit in the long run) for each preinstalled system with their distro on it.
Obviously the sales of their distro directly to the end-user without the benefit of a computer maker middle-man are going to drop like a rock when preinstalled Linux desktops (desktop meaning "with modem" in this case) are churned out by the major computer companies.. And, like others, I don't really buy into this "they're going to make their money doing support" thing all that much. However, doesn't the example in the preceding paragraph seem a little bit more viable to anyone?
Besides, I would think that the computer companies would want to include Red Hat's nifty little guides along with the computer system, too. Again, they would need to sign a deal with Red Hat (and probably pay a pretty penny for each copy).
~ Kish
- Big companies like Dell and IBM have staff that remember what happened when some uncareful deals were made with Microsoft.
- It may be cheaper to keep several Linux vendors alive and kicking than to commit to one.
- Playing the My Kernel Developer Is Better Than Your Kernel Developer game is none too safe.
- The Only Works With RedHat Linux label came long ago, and can't afford to stay.
This should not be misread as a prediction of impending failure, but merely to say that the commonly misperceived "infinite clout" just isn't that "infinite," even if they do have some on-paper billionaires...If it hadn't been for some real sharp intellectual property lawyers, Microsoft would probably have been a bit of "IBM toe jam."
After all, Macmillan Publishing was "devoted" to Red Hat Software until they became "devoted" to Linux/Mandrake...
Look, for instance, at the VA Linux Systems Ubergeek List. Note that they've "got" Ted T'so and H.J. Lu, amongst quite a list of important "Kernelmeisters."
Red Hat has some notable kernel hackers, notably Alan Cox and Stephen Tweedie; it is not vastly apparent that they have infinite clout in this regard.
If you're not part of the solution, you're part of the precipitate.
The last quarterly earnings for MSFT I could fine states MS brought in revenues of $4,331,000,000 for the quarter ending March 31st. Versus $4,400,000 for RHAT.
Or put another way, it takes Microsoft a little over 131 minutes to bring in revenues equal to what RHAT brings in during a quarter!
DrLunch.com The site that tells you what's for lunch!
Why does everyone keep saying that they're going to turn a profit eventually?
Their business model is unsustainable. They sell support, and at a flat-rate fee that doesn't cover the cost of support for those who use it. The only way they could turn a profit is to have the vast majority of people who buy their product need little or no support. Sooner or later people are going to figure out that it's stupid to buy the retail package just because they might want the support at some point in the future. After all, they can try to install it for free and then pay for the support only if they need it.
The revenues they have now are a mix of Linux-boosters who are giving charity and ignorant people who don't understand that the software is free.
They will never sustain big corporate clients, because an in-house Linux expert is cheaper and more useful.
Red Hat is never going to turn a profit, unless it becomes a fashionable charity. Yet another high-profile, high-price stock with nothing behind it.
I still can't figure out how a $4 million revenue company (quarterly) with a $0.09 per share loss (quarterly) can be worth $7.4 billion. It makes no sense. There are companies with over $1 billion in annual sales reporting huge profits not valued that high. Linux-Mandrake sales in July (10,445) more than doubled Redhat sales (4802). SuSE apparently is a profitable organization. My only guess for its high evaluation is because it is the sole pure linux stock available right now. When more Linux companies go public, watch for Redhat's stock to drop some.