Red Hat CEO: We Thrive in Any Environment

NEW YORK ( TheStreet) -- Even though Wall Street isn't reacting well to stronger-than-expected earnings, Red Hat ( RHT) CEO Jim Whitehurst has highlighted the software maker's ability to capitalize on a tough economy.

In a phone interview with TheStreet, Whitehurst pointed out strength in Europe, particularly Southern Europe, citing the fact that Red Hat does well in a down economic environment, as companies rethink their tech strategies.
Red Hat CEO Jim Whitehurst

"What allows us to accelerate growth is change," Whitehurst explained. "If the change is extreme cost pressure, then we do well. We do well in both weak environments and strong environments as long as there's change."

Even with investors giving Red Hat shares a haircut this morning on weak billings numbers and weak guidance, Whitehurst is confident about the next couple of quarters. "We see a very strong pipeline for us. The spending outlook for the rest of the calendar year is very strong for Red Hat. Operating cash flow grew 38% year-over-year, the core metrics look fantastic, and we continue to be optimistic."

The CEO noted that other high growth companies are growing along with their markets, such as VMware ( VMW) and salesforce.com ( CRM). Red Hat, he added, is not in a new category, rather taking market share in traditional categories, such as middleware and servers.

Red Hat's operating margins and cash flow came in exceptionally strong this quarter, Whitehurst said, as those two metrics are not affected by currency fluctuations. Non-GAAP operating margin was 25.8%, up 70 basis points year-over-year, and operating cash flow for the first-quarter was $124.4 million, up from $90.2 million.

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