Sales Surge Lifts Red Hat

Before today's session, shares of Red Hat were off about 34% on the year.

CFO Charlie Peters said on a conference call with analysts that the company is "cautiously optimistic that competitive efforts by some of the largest technology companies in the world are actually expanding our opportunity."

Was he whistling in the dark? Trip Chowdhry, managing director Global Equities Research, said Oracle has misread the market for open source software. "Oracle thinks Linux support is a cost issue; it isn't. It's a business issue," he said. His company does not have an investment banking relationship with Red Hat or Oracle.

One measure of Oracle's damage to Red Hat would be a sharp drop in prices. Indeed, the giant database company promised to sharply undersell its smaller rival when it entered the Linux market earlier this year.

In a brief interview after the announcement, Red Hat CEO Matthew Szulik would not disclose his company's average selling prices, but did say that Red Hat is "showing better gross margins, better long-term deferred revenue [and other metrics]. Those are not indicative of major price cutting."