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Updated from 7:22 p.m. EDT

Strong sales of its Linux software helped

Red Hat


boost first-quarter revenue by 38%.

Total revenue for the May quarter was $84 million, while subscription revenue increased by 45% compared to the same quarter last year.

Red Hat posted a profit of $13.8 million, or 7 cents a share. A year ago, net income was $12.4 million, or 7 cents a share. But the company said earnings for the quarter are not comparable because it has begun expensing stock options.

For the same reason, Wall Street's earnings expectations of 9 cents a share may not be comparable. Analysts were looking for revenue of $83.3 million.

Options cost the company $7.63 million, or about 2 cents a share, said Red Hat's vice president of investor relations Dion Cornett. According to Cornett, the comparison with First Call is also difficult because some analysts included the options expense while others did not, and there were various tax-related differences within First Call's poll.

In recent after-hours trading, Red Hat's stock dipped 4.1%, or $1.02, to $23.99. Shares closed the regular session off 33 cents, or 1.3%, to $25.01.

The stock was initially off more, likely because investors assumed the company had missed the quarter by 2 cents a share, and then realized it had not.

On a conference call, according to

, Raleigh, N.C.-based Red Hat said that revenue for 2007 will be $400 million to $405 million, greater than the company's prior forecast of $370 million to $375 million.

The estimate includes three quarters, or nine months, of

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, which will add $22 million to $27 million to the top line. It was not immediately clear whether analysts' consensus revenue estimate for 2007 of $384.4 million included JBoss revenue.



also reported that the company said it now believed the JBoss acquisition would hit full-year earnings by 4 cents a share, as opposed to its previous expectation of a penny-a-share impact.

For the current, or second quarter, Red Hat sees sales of $96 million to $98 million, which includes $6 million to $7 million in revenue from JBoss. First Call was expecting revenue of $92.4 million.

Red Hat completed its

acquisition of JBoss, an open-source middleware software company, on June 2.

Shares of Red Hat have followed the lead of the broader


this year, losing 7% of their value since January.

Even so, an investor who bought shares a year ago would have earned a return of 104%. In the last 52 weeks, the shares have traded in a wide range -- from a low of $12.20 to a high of $32.48.

As of Tuesday, the company was trading at 64 times forward earnings, while larger rival



is valued much lower -- 48 times earnings.