This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Red Hat CEO: Our Tech Is Going Mainstream

Stocks in this article: RHT

NEW YORK ( TheStreet) -- Red Hat (RHT) has traditionally seen financial services, government, technology, media and telecom as its biggest segments. However, the company's future lies in the head of not the early adopters, but the mainstream segments of the economy.

In a phone interview with TheStreet discussing the company's earnings, CEO Jim Whitehurst said Red Hat's technology is going toward the mainstream. "Traditionally, the leading edge industry verticals have always been our early adopters and users, including financial services, and military and intelligence agencies, but we're starting to see more sectors."

Red Hat's biggest deal during the quarter was a health care company and Whitehurst noted health care could eventually become as important or more important than financial services and government. "Health care companies are starting to show up in big way. They're huge users of IT, but they're more conservative. I think there's a shot that health care could get there the top ."

The Raleigh, N.C.-based open source software company earned 36 cents a share on $348 million in revenue. Analysts polled by Thomson Reuters were looking for earnings of 30 cents a share on $349.42 million in revenue.

Red Hat provided guidance for fiscal 2014 on the conference call. CFO Charlie Peters said Red Hat expects to generate sales between $1.51 billion and $1.54 billion, up to 16% year-over-year growth. Earnings are expected to be between $1.31 and $1.35 per share. Red Hat expects Non-GAAP operating margins around 24% for the full year.

Fiscal first-quarter revenue is expected to be between $358 million and $361 million, with non-GAAP earnings between 30 cents and 31 cents per share.

Even though Europe is mired in an economic malaise and slow or little-to-no growth, Red Hat continues to see strength, especially in Northern Europe. Whitehurst noted that Red Hat is seeing "really good strength across Europe," going to 25% of the company's bookings, up from 23%. The APAC (Asia-Pacific region) underperformed mostly because of Japan and a significantly weaker yen.

Despite some concerns about weakened currencies around the world, Red Hat is able to leverage the fact its open source model has technology coming from all over the world, which mitigates expenses in times of weaker revenue. "We continue to deliver solid double-digit growth, though that's clouded by currency," Whitehurst said. As the company's service revenue gets pushed more to its partners, its subscription revenue, which is growing at a double digit rate, should gain more focus.

Shares of Red Hat, which fell sharply in after-hours trading following the report, were down 3.9% to $48.01 in early Thursday trade.

-- Written by Chris Ciaccia in New York

>Contact by Email.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

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