Sarah Friar – Goldman Sachs
Thank you.
Tom McCallum
Next question please.
Operator
Your next question comes from the line of Kash Rangan of Merrill Lynch. Your line is now open.
Kash Rangan – Merrill Lynch/Banc of America
Yeah thanks very much, one question for Charlie, and one for Jim. I’ll just state the question for Charlie and then I’ll go to you Jim. First Charlie when I look at the cash flow guidance for the year, I think your assumptions may have not incorporated the change in the billings patterns that you’re seeing in this quarter. So obviously when you look at the cash flow statement, the delta in deferred revenue is lower than what it has been in the last few quarters. So are you able to still hang onto the cash flow forecast in light of some of the changes of the margin you’re seeing where the average contract length is going down by five months and also the one year billing component is a greater percentage of your mix. So is it time for us to fine tune our cash flows for this year? And the question for Jim, do you have any commentary at all on Oracle’s proposed acquisition of Sun. I know the last time you were not able to comment because the RDM proposal had not gone through. But I’m wondering with more clarity on that deal, I was wondering if you could give us your take on how you see Red Hat positioned in light of that big change that’s happening in the industry. That’s it, thanks.
Charlie Peters
Yeah I’ll go first. We will take those questions and then we’ll go to the next. On the cash flow we are reiterating the full year guidance. And I would also say that the average life of the deals in Q1 is not necessarily indicative of a longer-term trend or change and we will monitor that situation as the year progresses. So, Jim the question is any comments on Oracle Sun deal.
Jim Whitehurst
I think there’s still a lot up in the air. What happens to the hardware? What happens with MySQL? So at this point a lot of it is speculation. What I will say is we’ve seen a lot of interest from customers in post the deal being announced where customers were concerned about having too much spend concentrated with a single vendor. So certainly I call it short to medium term, i.e. over the next couple of years, it will be a positive as customers look for ways to diversify some of their risk. In the longer-term, I don’t see why it would be a negative. Whether it’s a positive or not, we’ll have to wait and see as we see what really happens to the hardware and what Oracle does with the various technologies.
Tom McCallum
Now Operator before we go to the next question I’d like to ask everybody to keep it to one question. We have a lot of people in the queue and we want to get through to everybody. So, one question, one follow up. Next question please.
Operator
Yeah. Your next question comes from the line of Tim Klasell of Thomas Weisel Partners. Your line is now open.
Tim Klasell – Thomas Weisel Partners
Good afternoon everybody. I wanted to talk a little bit about what’s changing with the larger deals. Are customers taking just one year contracts, or are they just taking the three year contracts and just paying on an annual basis.
Charlie Peters
First of all let me reiterate what I just said at the very end of my comment about the cash flow. I wouldn’t draw any longer-term conclusions from the Q1 result. We’ve already seen activity in the month of June which indicates that we may have some movement back the other direction. But specifically what happened in the first quarter is we did have a couple of the longer-term deals that decided to pay one year at a time instead of three years up front as I said. It doesn’t seem terribly surprising in this economic environment.
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