By BLOOMBERG NEWS
Shares of Red Hat Inc., the world's biggest distributor of the free Linux computer-operating system, rose nearly 18 percent yesterday after the company forecast that sales this quarter would exceed analysts' forecasts.
Net income will be $2.9 million to $3.2 million, or 2 cents a share, on revenue of $31 million to $31.6 million, Red Hat's chief financial officer, Kevin B. Thompson, said on a conference call late Thursday. Analysts expected on average 2 cents, on sales of $29.9 million, according to a Thomson First call survey.
Sales in Japan and Europe are helping increase revenue, the chief executive, Matthew J. Szulik, said Thursday. The company, which is based in Raleigh, N.C., works with computer makers including International Business Machines and the NEC Corporation, which sell machines that run Red Hat's version of Linux. Red Hat offers clients the programs and related maintenance and upgrade for a fee.
"Red Hat is the only direct way for investors to take advantage of the significant promise of Linux," Katherine Egbert, an analyst with C.E. Unterberg Towbin, wrote to clients. The quarter's results "prove, for the first time, that a profitable, cash-generating business can be built around open-source software."
Red Hat's stock rose $1.48, or 17.62 percent, to $9.88 a share.
Net income in the second quarter, which ended Aug. 31, was $3.3 million, or 2 cents a share, in contrast to a loss of $1.95 million, or 1 cent, in the period a year earlier. Sales climbed to $28.8 million from $21.2 million.