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Market Update : 
Red Hat Q4 Earnings Call Transcript
Author: 123jump.com Staff
123jump.com
Last Update: 11:33 AM ET March 31 2009


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Richard Williams – Cross Research

Okay. And as a follow up, have you seen any significant change in the length of the sales cycle? Thank you.

James Whitehurst

Not really. I think that one of the things of a tight budget is people really are scrubbing and some times it maybe an extra layer of management but it really has not changed the length of our sales cycle in any meaningful way.

Charles Peters

I have one comment as we do more middleware obviously that sales cycle is longer and so on average maybe its going up but it is a mix between middleware versus platforms. I don''t think there is a change in either one.

Tom McCallum

Operator, we have time for one more question and after that, Jim is going to provide us with some quick summary comments.

Operator

Yes. So your final question is from the line of Michael Turits with Raymond James.

Michael Turits – Raymond James

Hey guys, thanks. Charlie when you talked about the offsetting factors, the decline in server shipments listed about four of them in your talk. Can you think in order and then tell us, which are really the major ones that are contributing, because some of them are there but maybe not as big?

Charles Peters

I''d say one of the big ones is the – maybe the last comment I made which is the fact we have a disproportionately high share of VoIP servers which is growing faster than servers generally. In addition, it is kind of hard to quantify is that we do sell RHEL on other types of workstations, PCs that don''t get picked up in the server count in these various external surveys. And so that is probably the second devices and then mainframes are probably I''m not sure if it is in that order but are lesser and lesser important.

Michael Turits – Raymond James

And then, what about the repurposing as well as free-to-pay, are those next inline and are they material or are they just small factor?

James Whitehurst

I think the repurposing actually is probably relatively meaningful and I don''t know that we always know for certain, how to quantify that. The free-to-pay as I said before, it is a nascent activity for us about five months old. We''ve got some real focus on it and we think that there is some real traction to gain there but it still early.

Charles Peters

And frankly, we don''t have perfect data on this. We will have a customer come in and buy, $300,000 worth of RHEL. How much of that replacement versus new servers? We may not necessarily know. So, we are kind of in the weeds doing bottom up forecasting and then kind of backing back into it. So, it is a little bit of all of those. It is hard to kind of stress it down to the specifics.


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