Red Hat's In The BlackRed Hat's In The Black

What a difference a year makes in the Linux market. Linux and open-source software provider Red Hat Inc. on Tuesday reported a fiscal 2004 profit of $14 million, or 8 cents a share, compared with a loss of $6.6 million for fiscal 2003. Revenue rose to $126.1 million, up 39% from $90.9 million a year ago.

Red Hat saw much of its year-to-year growth on the software-subscription side of its business, while services revenue was basically flat. Subscription revenue rose to $84.8 million, up 72% from $48.6 million a year ago. Services revenue held steady at $42.3 million.

The company ended the fiscal year on a high note, reporting a profit of $5.0 million, or 3 cents a share, on revenue of $37.0 million for its fourth quarter, ended Feb. 29. A year ago, Red Hat lost $273,000 on revenue of $25.9 million. During the fourth quarter, Red Hat Enterprise Linux subscriptions increased by 87,000, most sold to the enterprise IT market.

Red Hat estimates first-quarter 2005 revenue will be at least $42.5 million, with software subscriptions accounting for at least $30.4 million.

Much of Red Hat's success has come from Linux supplanting the Unix operating system, chairman, president, and CEO Matthew Szulik said during Tuesday's earnings conference. Szulik also said his company's success should put to rest questions about whether Linux is ready to be an enterprise operating system and how companies can make money in the Linux market.

Szulik made little reference to his company's ongoing legal stalemate with SCO Group, which claims that Linux distributors and users are infringing on its Unix System V source-code copyrights. He did say that Red Hat's legal bills are beginning to mount.