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. :)

Comments

Redhat overvalues

[Anonymous Coward]

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.

Re:Economics question.

[Moooo Cow]

A company can operate at a loss for a while, as long as there is a reasonable expectation for profits in the future.

Simple example: I'm Bob Young, I have $1 billion dollars in my pocket, and I want to start a company for my hot new product, Linux Cabbage Patch Beanie Babies. I anticipate that my expenses will be $10 million the first year, and grow at 10% per year as my company grows. Also, I anticipate that my revenue will be $1 million the first year, and will grow at 100% per year as my hot new product catches on.

(Excuse the ugly formatting on this table - I hope you get the idea):
Year Expenses Revenue Profit
1..... 10..... 1..... -9
2..... 11..... 2..... -9
3..... 12..... 4..... -8
4..... 13..... 8..... -5
5..... 14..... 16.... +2 (woo hoo!)
6..... 15..... 32.... +17 (jackpot!)
etc.

Now, suppose I'm not Bob Young, and I only have $10 million in my pocket. Based on the above numbers, I'm bankrupt after year 2. So, I need to find investors (either one big one, or lots of little ones) who believe that these LCPBBs are as hot a product as I think they are, and will finance this loss in the short term in order to reap profits in the long term. A corporate merger would give me one big investor - an IPO gives me lots of little ones.