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Red Hat Stock Splitting
zerOnIne writes "ZDII has a story detailing that Red Hat plans to split their stock on a 2-for-1 basis, sometime about January 7. " The story also talks about Red Hat filing a 3.6 million dollar loss on a revenue of 5.4 million. Sales were up 24 percent from this time last year.
I'll go ahead and take away my +1 bonus because i'm about to say somehting that's not nice about redhat. Well, not redhat... But just because everyone here owns Redhat stock, that doesn't make this a newsworthy event... Stocks split all the time. It changes nothing. You get twice as many shares but they're all now worth 1/2 as much. They do this to "make the stock more accessible to the smaller investors" which means nothing because anyone can buy a single share of the stock... and if you can't squirrel away $200 for a single share of the stock, you shouldn't be buying up stocks anyways... Show your support for the company by buying their products instead.
Our office is right down the street from Red Hat's new HQ. We've noticed a substantial increase in the average value of the car driven by Red Hat employees during the last few months.
I'm sure that this earnings news is going to have some impact on the cost of Red Hat's shares, but I don't think that it will bother option holding employees all that much!
Mike Eckardt meckardt@spam.yahoo.com
As for their profits, it shouldn't be too long before they're in the black, on the balance sheet. Their growth has been consistant, up to now, but should take off now that they're getting the attention of the suits as well as the techs.
A couple of years ago, I predicted that within 6 years, Linux would match Microsoft in the total number of users out there. 4 more years to go, and it's looking like I might not be too far off track.
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
Perhaps we should move #redhat to UnderNYSE... Their servers don't suck so f***ing much...
-troll taker
It all depends on market value. If the stock plunged to what common sense would dictate the company was "really" worth, there'd probably be a number of companies lining up to buy them out, thus driving the stock price up (unless a majority of shares were held back by RedHat to prevent this).
Losses are not really indicative that the company isn't worth anything. They made money - they just are re-investing it, which is exactly what they should do. If you could declare a loss to the government, even though you'd made all sorts of money, I'm sure you would, to avoid taxes.
First, make it work, then make it right, then make it fast, then, make it bloated!
[Guess who feels stupid now!!!]
:-)
I give up... you?
A stock split doesn't make anybody any money. If you had $1000 of RHAT immediately pre-split, you'll have $1000 of RHAT immediately post-split.
Kind of like the guy who went in to buy a pizza, and they asked if he wanted it cut into 8 pieces or 6 pieces. He said "better make it 6, I could never eat 8 pieces..."
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- Stephan.
Carpe diem.
A couple of folks have misreported this (including Slashdot). Third quarter growth is 24 percent from the previous quarter. The growth is 63 percent compared to 3rd quarter of last year.
Well, it's a fairly simple matter to have revenues of $54 million and a net loss of $36 million. Revenue is (to oversimplify a bit) the amount of money brought in. Net income (or loss) is essentially income minus expenses. In this case, that means that Red Hat spent more than they took in. Most accountants would accuse me of tragically oversimplifying this matter, but that is my right as an American. On another tack, RedHat's revenues were significantly higher this year than one year ago. That is a good sign. Now it's up to management to turn those higher revenues into a net profit. I am not exactly a RedHat fan, because I believe that RedHat is showing some early signs of Microsoftian corporatism, and that is highly counterproductive to the open source movement. However, I must temper my anti-RedHat sentiments with the facts that a) they are promoting a better product than Microsoft has ever created, b) they are open source contributors, and c) it's just plain Linux. We all take a few bitter pills, so I guess I'll reluctantly throw in my support for RedHat's continued success.
Windows is going the way of phlogiston...
No, Caldera is still privately held, and is owned largely by Ransome Love and the Noorda family trust. There have been rumors of a Caldera IPO floating around by haven't heard any particular date or price mentioned.
When the source is open, I just can't see this happening. This has been touted time and time again, and it just keeps not happening.
It does hilight the importance of educating those consumers now thinking about Linux in what free software is, what the various licenses mean, and why it matters that the source be now and forever free/open, even if the consumer is not a programmer and never intends to be. We need to make sure people understand how the source protects consumer interests.
I have seen no signs of efforts to create incompatbility, although I have seen potential for incompatibility arising out of sheer complexity. That's why I think the LSB project remains important.
The net brought us online daytrading, and now with Red Hat, VA, PERL, etc., the daytraders finally have something to do: get all excited over HOT! HOT! HOT! linux stocks.
This split is great. Previously options on RHAT were just too damn expensive--you buy and sell options in units of 100, and at RHAT's prices that meant the minimum options bet was a couple thousand dollars. Now that RHAT options are affordable, all those daytraders who are furiously reloading their stock screens and trading every five minutes have been given yet another way to blow their life savings away.
Given that the average slashdot reader is obviously a sweaty, shifty-eyed daytrader who spends all agonizing over every 2-3% change in the price of linux stocks, this definately is stuff that matters!
Absolutely. Slashdot needs to go back to its roots and not become a money obsessed site for other people. Being bought was clearly a bad thing. Look what happened to Wired after they became obsessed by large piles of cash, it turned into an unreadable waste of space.
And the adverts suck. Maybe its time to fork slashdot. Or rename it slashdot.com.
suddenly people will be writing code for one distribution that will absolutely NOT work on any other
:) and getting into Linux by night / weekend. I don't have time or inclination to do much more than that; there's too much to get my head around and frankly too much coding can kill you. I don't have time to play with *BSD distributions. :). It's hard enough as it is, without having to get into other OS's as well. But when I get something together that's worth letting other people see, I will GPL it, and publish it on my website. And if someone wants to use it on *BSD, they're welcome to take my code, and get it to run on their box, it they think it's a useful tool. That's the power of the GPL, IMHO...
Well, this will happen. I'm a Win32 coder by day (oh, the shame, this will be instant Score : -1 Troll
That said, I do play at coding under Linux (port scanning stuff at the minute hehehe
Strong data typing is for those with weak minds.
Apropos of nothing, Vladimir Nabokov used the image of a red top hat to imply someone beheaded by a guillotine.
I think a 24% increase in sales is actually pretty stunning, for an idea that most people said was insane to begin with. I mean, they're selling software that can be had for free or extremely low-cost in many places (ok, I know 80 bucks isn't particularly expensive, but it is compared to 3 bucks). In any case, I think that capturing nearly a quarter of that 2x increase in direct sales is pretty damn good, and better than I would have projected for them, if I were trying to work out the numbers before the fact.
Just my 2% of $1. :-)
"Get away from my house you freak!"
-Neal Stephenson
There is no K5 cabal.
I am not the real rusty.
This "odd lot" stuff is a myth. There is no additional cost to buying/selling 100 shares, although commissions might kill you. This has been true for like ~20 years now, since deregulation of the securities industry.
The issue of small investors, however, is very real. If you want to invest $2,000, and the share price is $3,000, you can't even get in the game. If the share price is $1,200, you can only buy *1* share, and you have $800 you can't do anything with. I've made these numbers up, but when you're talking share prices in the > $200 range, the effect is an issue. Smaller share prices let you fit the money you have to invest to a number of shares with greater ease.
And for an extreme example, check out Berkshire Hathaway, which has never split its stock. The ticker is BRK.A, and it's trading at $54,000 a share today. They issued special shares, BRK.B, to deal with this issue, which trade at exactly 1/30th of the price.
Granted the more money RedHAT has to pour into Linux the better, however the market valuation is TOTALLY out of line with redhat's future earnings potential. Other established companies (such as corel and oracle) can come up with a linux distribution, package it with their products, support it themselves and leave redhat high and dry. No one (except us nerds) gets excited about an operating system. They want applications. If I were a stock trader, I'd be buying other linux companys, redhat seems to me like a baloon waiting to burst.
I only wish I had money to buy redhat, because at $18B, the company is still vastly undervalued. MSFT is worth $579B, so by my calculations, RedHat still has $561B worth of expansion yet to do. BUT... it won't happen overnight.
To those who get it: buy a goodly chunk of RedHat, and then squirrel it away and forget you even have it. Don't read the "investor" message boards, and don't check the ticker. Just hold onto it for dear life.
Your children will thank you.
"Get away from my house you freak!"
-Neal Stephenson
There is no K5 cabal.
I am not the real rusty.
While it is possible to buy one share, in practice you must generally buy 1 "block" of shares which on most markets is 100 shares.
I take it you do not know anything about how a company works, eh? Look at what Redhat has done in the past quarter. It costs money to buy a company or two or three. The 'loss' is just reinvestment, and it is a sign that the company is really making changes. Try waiting more than one quarter to judge things like this.
It's just one more milestone in the mainstreaming of Linux, and people like to hark those milestones with fanfare. Linux is officially big enough for a company selling it to split its stock.
And besides, there are legitimate reasons for splitting one's stock: avoiding the impression of overvalue, reducing the violent swings in value that correspond to changes of a few percentage points, increasing the pool of stockholders to broaden the holdings, etc.
"If one is really a superior person, the fact is likely to leak out without too much assistance" -- John Andrew Holmes
Also, if you got in at the IPO and held the 400 shares (or the 100 I had in the second group), you can now sell some of your shares. And, if like most Linux coders, you could only scrape up enough to buy 100 shares, now you can sell 100 of them and stop scraping by with no cash reserves.
Will in Seattle
That is 24% PER QUARTER. That is an TERRIFIC growth rate. Most companies do well to get 15% per year. Dell, one of the fastest growing companies I ever heard of has been growing at 50%/year in the past.
Ah, the wisdom of the stock market! What does this consist of? About three quarters of the men and probably half the women in the country, making bets on matters they know nothing about. Just think of all these people, and how much they know about Linux and computers, corporate finance and macro-economics. If you think this adds up to close to nothing, you may be right. For now they are all merrily marching in one direction, on the golden road to unlimited wealth. But mobs of uneducated people are not necessarily the safest bunch to fall in with. I'll stick to coding and get rich the old-fashioned way.
I do believe, however, that the market for RedHat is as large, if not larger, than the one for MS. It's a different market, and a different approach, but I think it's just as big. I don't think RedHat, even if it was worth 579 billion, would ever look just like MS, in any way that matters.
And as for "shutting out windows on the desktop," it'll never happen, because the desktop won't be a market worth competing over. Today's computing environment will appear, fifty years from now, as quaint and charming, but slightly odd in the same way that the steam-powered mechanical contraptions of the victorian era strike us as quaint and charming, but somehow just a weird way of doing things.
Sorry, but I'm in a prognosticating mood tody... :-)
"Get away from my house you freak!"
-Neal Stephenson
There is no K5 cabal.
I am not the real rusty.
Linux.com technically already IPO'd - they're not a separate company, they are run by VA Linux.
Sorry to detract from the joke :)
Because they are plowing money into their 'product' instead of controlling expenses instead to make a profit. They are very early in their lifetime as a companyand are spending money expanding and ramping up their offering and r&d in anticipation of future revenues.
Someone in the market thinks that they will be making _far_ more that $54 million in revenue per year in years to come. So they pour all that capital into expenses like paying salaries, hiring talent, etc and in 5 years their revenue should be in hundreds of millions, then they will dial back on expenses to generate a net of 30% or more. That kind of a return will be what corporate investors will probably be looking for from a semi-mature growth company. I dunno. If I had cash on hand I would buy up some shares.
First of all, we should ignore investor speculation, loans, and projected earnings and look at total earnings now to decide whether software can sustain a business, which obviously it can't unless you're Microsoft. Even after they shifted from software sales to internet portal banners, they still lost money. Well the consistant losses that not just internet companies but everyone is posting should raise a red flag. Did anyone make money last year? As far as I'm concerned, there are just a lot more people borrowing money than there were in 1993 but the underlying profits that would have distinguished us from 1929 are non existant.
Look, you can argue that Red Hat is or isn't a good stock buy at this point, but you can not argue that it makes any sort of technical sense. Based on earnings, P/E and any other indicators you can imagine, Red Hat is a laughably overvalued stock. No amount of aggressive investments or aquisitions are going to be able to fix that.
The whole thing is going to come down hard. When it does, I worry that the whole Linux community will be discredited in the eyes of the business-types. I also worry that a lot of geeks (many of whom think they're somehow suddenly market gurus) are going to lose their shirts.
Geeks without shirts can be downright ugly.
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Every year during my review, I just pray the words "slashdot.org" aren't mentioned.
I guess I'm just not seeing this. A thought experiment:
Shares are worth $32. You own one. It goes up by 1/16th, or $2. Your stock is now worth $34.
Now it doesn't go up; instead, it splits. Now you own two shares worth $16 each. The value goes up by 1/16th, or $1 per share. Your total stock is now worth $34.
What's the difference?
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Every year during my review, I just pray the words "slashdot.org" aren't mentioned.
I don't disagree with you that it is something to be concerned about, but so long as the code is GPL'ed it simply cannot go far. They can't take it under. Period. Sure they can write proprietary extensions, but how many open source developers will use a closed interface? I know I won't do so.
.com stocks.
I think the concern is overstated.
"Branding" is fine (well, not really -- Intels campaign suggesting that a Pentium III will miraculously energize your 33.6 kbps Internet connection springs to mind), but I do not see how adding closed extensions to RedHat could possibly be perceived as an advatage in the marketplace. Let's say you're a closed source ISV (like an Intuit) who decides to port your product to Linux. Do you do it in a way that ensures you can market to the largest possible number of computers, or do you do it in a way that narrows the market?
Microsoft did not get to be the lion's share of the desktop market by fragmenting the market; they did it by consolidating the market. Developers started writing apps exclusively for Windows after Windows controlled the market. Many ISVs still develop Mac versions, and those that don't took a look at the cost of porting their code to gain a small market share and decided it wasn't worth it. If RedHat amounts to 50% of the Linux market, and Linux comes to be, say, 20% of the PC market, then ISVs might well port to Linux, but are unlikely to port to RedHat exclusive extensions.
As for anyone dumb enough to buy RedHat stock at current prices, you get what you deserve. By now, it should be obvious to anyone that there is a bit of a bubble in the technology stocks, esp. the linux and
If you bought 'em cheap, swell. Hold 'em. If not, I'd take my profit before it evaporates.