This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Red Hat CEO: 'This Is a Good Market For Us'

NEW YORK ( TheStreet) -- Despite Red Hat (RHT - Get Report) shares seeing slight pressure in early Tuesday trade, CEO Jim Whitehurst says that this is a great environment for the Linux software provider.

"This is a really good market for us," Whitehurst noted, in a phone interview. "There is relative uncertainty right now, so budgets are tight, and the basic cost saving stuff we do is working well in tight markets." The CEO also pointed to the shift to cloud computing, particularly on open source, adding that Red Hat's well positioned to deliver growth for investors.

Shares of the Raleigh, N.C.-based company are up 35% year-to-date, and Whitehurst said that the stock's performance is based on strong growth and solid guidance provided in March. Wall Street analysts have been predicting that Red Hat's organic growth would eventually slow to that of GDP growth, currently at 1.7%. Red Hat, however, has been able to continually deliver growth of 20% or more on a constant currency basis. "Our job is to beat the fade," Whitehurst noted. "If we can continue to grow 20% every year, that will drive the stock."

Whitehurst noted that when the company surpassed a $1 billion annual revenue run rate, he said the next goal would be $3 billion in five years. While this isn't guidance, the CEO said that the compound annual growth rate (CAGR) to get to $3 billion is more than 20%.

Red Hat reported second-quarter non-GAAP earnings of $54.9 million, or 28 cents a share, on revenue of $322.6 million for the three months ended in August, up 20% in constant currency.

The company missed analysts' estimates by a penny per share, as costs rose due to the acquisitions of Polymita and Fusesource that were completed during the quarter. Red Hat also expects to see material revenue from last year's acquisition of Gluster over the next 12 months. The company will provide an updated forecast in roughly 60 days.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
RHT $76.55 1.60%
AAPL $123.22 -0.82%
FB $83.30 0.35%
GOOG $548.13 -1.30%
TSLA $185.15 -2.80%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs