Red Hat sailed past analysts' estimates in its second quarter results, released last night, and hiked its full-year guidance. Whitehurst told TheStreet that a difficult spending environment has added to the appeal of the firm's open source offerings, which it touts as a cheaper alternative to products from the likes of Microsoft (MSFT).
"In a tight economy, people are looking to save money," he told TheStreet. "We have been able to do quite well selling value in an uncertain economy."
Whitehurst, the former chief operating officer of Delta Airlines (DAL), also struck a bullish tone on his company's long-term prospects."No matter what the market is, we will see strong double-digit growth," he explained. "It beats the hell out of the airline business!" Red Hack racked up second-quarter revenue of $281.3 million, a 28% increase on the same period last year, and comfortably above analysts' estimate of $271.8 million. The company's subscription revenue climbed 28% year over year to reach $238.3 million during the second quarter. Specifically, Whitehurst credited the explosion of cloud computing as driving demand for his firm's Enterprise Linux offerings. "Clouds run Linux -- it's a reality," he said, pointing to open source deployments at cloud trailblazers Google (GOOG) and Amazon (AMZN) which have set the tone for other companies. "Our products, I think, are seen as clear long-term winners in the next-generation of computing." Additionally, the CEO said Red Hat's annuity-based subscription model ensures a solid revenue stream, even in an uncertain economic climate. "The nature of the economic model relatively buffers us," he said. Concerns about IT spending are swirling round Silicon Valley although Red Hat rival Oracle (ORCL) deftly side-stepped these fears earlier this when it posted robust first-quarter numbers. Red Hat's shares surged following the company's results on Wednesday, and continued their momentum on Thursday, climbing $1.69, or 4.19%, to reach $41.98. --Written by James Rogers in New York. >To follow the writer on Twitter, go to http://twitter.com/jamesjrogers. >To submit a news tip, send an email to: firstname.lastname@example.org.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV