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Earnings Calls: 
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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Your next question comes from the line of Nabil Elsheshai. Your line is now open.

Nabil Elsheshai – Pacific Crest

Hi guys. If you look at the virtualization release coming up later this year, do you look at that as kind of an incremental revenue opportunity either through driving greater AP sales or incremental revenue opportunity or is it too early in the virtualization story to make that call.

Jim Whitehurst

In terms of long-term strategically we see a revenue potential on the management tools as well as standalone hypervisor working with others. So there’s certainly revenue opportunity well beyond just what’s in the platform. In terms of revenue this year, I think it’s too early really to talk about impact for this fiscal year. But certainly we’re not just doing this to enhance our current RHEL business.

Nabil Elsheshai – Pacific Crest

And then on the competitive front and in particular with Oracle now that they have potentially two operating systems, to the degree that you do compete with them on Unbreakable Linux, did you see customers concerned about the future of that product line?

Jim Whitehurst

I think you’ve seen over the last couple of years customers have been concerned about it. We’ve yet to lose a major customer. As we’ve talked about over the last year, all of our top 25 deals each quarter for the last five quarters have renewed. So I think the only one that didn’t in the last couple of years was Oracle itself. So I think Oracle’s competing Linux is a fork of Red Hat Linux, very few hardware or software certifications. They are not capable of guaranteeing that any changes they make for their customers will make it in back up stream and therefore they’ve had very limited success in selling the product. I think with the addition of Solaris I think it would be an even harder sell of something that’s already proven pretty unsuccessful for them. So, yes, I wouldn’t want to be the sales guy comped on selling of Oracle Unbreakable.

Tom McCallum

Operator, are there any more questions?

Operator

There are no further questions at this time.

Tom McCallum

Wonderful. This concludes our call today and we look forward to any follow-up questions you may have. Thank you very much.
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