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Red Hat Q1 Earnings Call Transcript
Author: 123jump.com Staff
123jump.com
Last Update: 1:16 AM ET July 02 2009

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Red Hat first quarter rose 11% to $174 million with subscription revenue going up by 14%. Net income rose marginally to $18.5 million. Earnings per share were 15 cents as against 12 cents a year ago.


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Brent Williams – The Benchmark Co

I wanted to go back to the Oracle bid for Sun that’s out there. Do you think that the odds are that they are going to change the Java community process or anything to favor their own products more? As you know, Sun never did a particularly good job taking any of the four application servers they were trying to bash together and really monetizing it, but Oracle has got a much bigger revenue stream there and an incentive to really bend the process. Do you think that they might be able to do that and do you think that that ends up being an opportunity as partners throw up their hands and say, I need to get open source because I don’t need that kind of concern or do you think that it might be an issue that they’ll just stop talking to non-Oracle providers.

Jim Whitehurst

I think first off, we’ve obviously been involved in the JCP with Oracle for a long time and Oracle has over a long period of time continued to ask for more openness. I think given that Java is not a standalone world, there’s dot net out there as well and I think Oracle, I certainly think and hope understands the importance of keeping Java very, very open and moving forward, recognizing that it’s not a single world out there and Java has to compete with lightweight frameworks, has to compete with dot net and so it’s important to keep Java vibrant and thriving. And I think they understand that. All that said I do think that developers in general are using lighter weight frameworks and other things and bypassing the heavyweight Java and so a combination of a little lack of clarity there as well as some of the other movements going on, certainly accrue to our benefit. And as we talked about we made some significant announcements recently talking about our ability to support kind of any model a developer wants to use.

Brent Williams – The Benchmark Co

And relatedly, they’re also going to get Solaris if they complete this deal including open Solaris. Have you had any up-tick in customer activity, people saying I wonder what this does to the future of that operating system and are you looking at putting in place any programs to help particularly the open Solaris crowd, what there is of it, to move away and not look back?

Jim Whitehurst

No, frankly we haven’t seen a material open Solaris customer base in the enterprise. Most customers when they decide to make the jump from Solaris decide to go all the way to Linux versus taking an interim step at open Solaris. So it’s not been a significant market factor to date, and we’ll obviously continue to watch it going forward but most of our customers are still focused on getting off of Solaris and going all the way to Linux and we’re quite good at helping customers do that.

Tom McCallum

Next question please, operator.

Operator

Your next question comes from the line of Richard Williams of Cross Research. Your line is now open.

Richard Williams – Cross Research

Hi, my question, I wonder if you can give some geographic color, customer sentiment, that sort of thing.

Charlie Peters

I can just reiterate I guess what I talked about in terms of the geographic split of the business with 53% in the Americas and 20% in APac, just to make sure I get my numbers right. The customer sentiment in countries around the world is in many cases mostly linked to the economic situation in the countries in which they’re doing business because they’re limited by the budgets that are made available to them. Apart from that we’re still seeing very high interest in open source software and finding ways to cut costs. But the common thing across every region I believe is that. Just to reiterate the numbers, it was 53% Americas, 25% EMEA, and 22% Asia Pacific, right.

Tom McCallum

Next question please, operator.

Operator

Your next question comes from the line of Todd Raker of Deutsche Bank. Your line is now open.
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