Red Hat Shares Rocked

Updated from Oct. 25

SAN FRANCISCO -- Shares of Red Hat(RHAT Quote) plummeted Thursday morning after Oracle(ORCL Quote) said late Wednesday that it will offer full support for customers running the smaller company's version of the popular Linux operating system.

Because Linux is essentially free, vendors such as Red Hat survive by selling support and maintenance to corporate customers, so every Red Hat customer who chooses to buy support from Oracle represents lost Red Hat revenue.

Investors understood that dynamic immediately, selling off Red Hat shares in after-hours trading. Early in Thursday's session, Red Hat lost $4.57, or 23.4%, to $14.94, as a slew of brokerages downgraded the stock. ...