Red Hat Revenues Jump but Losses Increase

It beat estimates by a penny.
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Red Hat

(RHAT)

said Monday that strong demand for Linux-based hardware and software pushed up revenues 39%, but losses increased over the same quarter last year.

Linux is a form of so-called open source code that allows its users to scrutinize and modify the source code for their own uses.

After non-cash charges and one-time acquisition costs, Red Hat reported a loss of 4 cents a share, compared with a loss of 3 cents from the year-earlier period. Analysts polled by

First Call/Thomson Financial

were expecting a loss of 5 cents for the quarter.

Revenues jumped to $13.1 million from $9.4 million between the comparable quarters.

"Demand for Red Hat products is strong in ISPs, Web hosting companies and manufacturers of Internet devices," Matthew Szulik, president and chief executive of Red Hat, said in a statement. "Post the consolidation of our recent acquisitions, Red Hat is in position to accelerate revenue and margin growth on a global basis."

Red Hat, a manufacturer of open source code products that allow easy customization, completed acquisitions of

Cygnus Solutions

and

Hell's Kitchen Systems

in January. The company, based in Durham, N.C., makes money through services offered to install and maintain its products, unlike

Microsoft

(MSFT) - Get Report

, where license fees make up the bulk of its revenues.

Concessions made by Microsoft in its ongoing

negotiations in its antitrust suit brought by the

Justice Department

should benefit Linux companies such as Red Hat. Microsoft's proposals include one to unlock Windows' 2000 source code so that computer and software makers could add a rival's products.

There was no pre-market activity in Red Hat, according to

Instinet

. (Red Hat closed down 3 7/8, or 6%, at 56 5/8).