Red Hat Shares Plunge as Q4 Revenue Miss Street’s Expectation (RHT)
Despite reporting better-than-expected earnings thanks to 17% revenue growth in the fiscal fourth quarter, shares of open-source Linux operating system provider, Red Hat Inc. (NYSE: RHT) fell about 3.70% in aftermarket hours on Wednesday as revenue fell short of Street’s estimate.
The Raleigh NC based Company said that total revenue, which included proceeds from subscriptions, training and services, rose to $347.88 million from $297.01 million, in the same quarter of last year. Analysts polled by Thomson Reuters, on average, were expecting revenue of $349.64 million.
Amid strong demand for its Linux Software, Red Hat posted consistent quarterly revenue growth in the recent past.
As more and more companies switched to cloud computing, demand for its open source software products rose sharply. The Company is the market-leader in Linux software.
However, worsening macroeconomic environment in the euro zone and rise in payroll taxes in the U.S. are delaying businesses’ plans to upgrade to Red Hat’s Linux software from older Unix systems, said Richard Williams, an analyst at Cross Research, according to Bloomberg. This is turn, is putting pressure on revenue.
Besides, another cause for concern is higher operating cost. For the recently concluded quarter, operating margin fell to 24% from 26%, in the same quarter of last year.
For the fiscal fourth quarter, Red Hat reported a profit of $42.97 million or 22 cents a share, compared to a profit of $35.97 million or 18 cents a share.
After adjusting for onetime items, adjusted or non-GAAP earnings came at 36 cents a share up from 29 cents a share. Analysts’ consensus forecast was earnings of 30 cents a share.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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