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3/25/2003
03:03 PM
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Red Hat Can't Quite Make The Black

The Linux vendor just missed breaking even in its fourth quarter and for its full fiscal year as sales rose.

On its 10th anniversary as a company, Linux leader Red Hat Inc. on Tuesday reported a fiscal 2003 loss of $6.4 million, or 4 cents per share, on annual revenue of $90.9 million, narrowing the previous year's $140.2 million loss, or 83 cents per share, on $78.9 million in revenue.

One quarter after reporting its first quarterly profit, Red Hat stated a net loss of $56,000, breakeven on a per-share basis, on $25.9 million in revenue for its fourth fiscal quarter, ended Feb. 28. This was an improvement over a loss of $42.3 million, or 25 cents per share, on $18.6 million in revenue for the year-ago quarter. The company expects to see revenue of at least $27 million for its first quarter of fiscal 2004.

The company continues to hang its hat on subscription sales for its Linux open-source operating system. Red Hat sold $48.6 million in subscriptions in fiscal 2003, up 12.9% from the previous year. Services revenue for the year was up 13.5% from fiscal 2002, to $42.3 million.

Although Red Hat's financial situation improved markedly in the past year, the company was unable to turn a profit, most notably because of changes in foreign currency rates to the euro and the Japanese yen. These changes affected Red Hat's revenue because the majority of its developers are located in foreign countries.

Last week, Hewlett-Packard teamed up with Red Hat to become a services partner for Red Hat's full lineup of Enterprise Linux operating systems, including ES on the low end, AS on the high end, and WS for workstations. Earlier this month, Red Hat introduced Enterprise Linux Basic ES, which sells for $349 and is its first enterprise product aimed at small and midsize companies.

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