Red Hat's fourth-quarter sales dropped

Despite the growth of Linux adoption in enterprise and business use, Red Hat, the large company that sells Linux operating-system software fell after reporting fiscal fourth-quarter sales that missed estimates as some customers stopped purchasing, due to the current global economic situation.

Profit excluding some items was 36 cents a share on sales of $347.9 million, the Raleigh, North Carolina-based company said yesterday in a statement. That compares with analysts’ average prediction of earnings of 30 cents on revenue of $349.3 million, according to data compiled by Bloomberg. Sales and profit forecasts for the current period also missed projections.

The reason why Red Hat's customers stopped purchasing is that tax has increased in the US and in Europe, the recession has become worse. That is why businesses delay upgrading to Red Hat’s Linux software from older Unix systems.

Red Hat's share price had dropped around 5 percent this year, currently at $50.56/ share and that makes investors disappointed. Investors were also disappointed by Red Hat’s fourth- quarter billings, an indication of future sales. The sales plus deferred revenue were only $454 million, compared with analysts’ estimate of $471 million.
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