Linux pioneer and stock market darling Red Hat Inc has reported a net loss of $3.6m, or $0.05 per share, on revenues of $5.4m for the third quarter ended November 30 1999. Revenues for the nine months ended November 30 came to $12.6m, for a net loss of $8.8m, or $0.21 per share. The results came in short of Wall Street expectations by one cent and executives attributed the shortfall to the company’s aggressive expansion of its activities outside the USA. Loss aside, revenues are rising. According to CEO Matthew Szulik, those revenues are being driven by increasing demand for Red Hat Linux, for services and for the content and customers of the company’s Linux portal site, Redhat.com.
Red Hat’s third quarter has been a busy one. The company signed a definitive agreement to acquire development toolmaker Cygnus Solutions, expanded the scope of its service offerings to include other open source packages like Apache and Sendmail and increased the number of its enterprise customers from 34 to 60. It struck deals with Intel Corp, Dell Computer Corp and Compaq Computer Corp, appointed Mark White as general manager for Asia-Pacific operations and opened two training facilities in California and three in Europe. A new certification program was introduced and Red Hat also hired Russ Mitchell, formerly of the US News and World Report and Wired News, to run an open source news service, Wide Open.
Investors expressed their approval of the quarterly report by driving the company’s share price up $15 over the day’s trading. Shares in RHAT closed just under $268, giving the company a market capitalization of $18.4bn. Red Hat also announced a two- for-one split of its common shares, and noted that it was considering a second public offering. The stock split will take place on or around January 7. Every stockholder of record at close of business on December 27 will receive an additional share for every share they hold. Red Hat’s 68.8 million outstanding shares will number around 137.6 million after the split goes through. If the secondary offering does take place, executives hope to have the registration statement filed during the week of January 7.
