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The Associated Press December 19, 2011, 6:39PM ET

Red Hat 3rd-qtr profit, revenue grow; shares sink

Software company Red Hat Inc.'s fiscal third-quarter net income rose 47 percent as subscriptions increased. But shares tumbled Monday after the company's revenue forecast for the current quarter fell short of Wall Street expectations.

Red Hat makes money by providing support to business users for the freely distributed Linux operating system. It says it is expanding its "cloud computing" and investing in its big data storage business. The cloud allows customers to store software and applications on remote servers. They're delivered over the Internet rather than via software installed on customers' individual computers.

The Raleigh, N.C., company said it earned $38.2 million, or 19 cents per share, in the September-November quarter. That's up from $26 million, or 13 cents per share, in the same period a year ago.

Stripping out costs for stock-based compensation and one-time events, Red Hat reported earnings of 28 cents per share. Revenue increased 23 percent to $290 million from $235.6 million.

Quarterly results topped estimates of analysts polled by FactSet, who had expected earnings of 26 cents on revenue of $289.6 million.

Red Hat said that during the fourth quarter, it posted its best billings growth rate in four years.

But shares tumbled $4.31, or 9.4 percent, to $41.74 in after-hours trading as the company issued a weaker guidance for the current quarter. Red Hat said it expects earnings per share, stripping out one-time items, of 26 to 27 cents for the quarter ending in February, on revenue of $289 million to $292 million.

Analysts expect earnings of 26 cents per share on revenue of $292.6 million.

The company said the stronger dollar will hurt fourth-quarter revenue by $4 million. U.S. companies that sell products or services overseas take a hit when translating foreign revenue back into a stronger dollar.

For the year, Red Hat expects earnings per share of $1.07 to $1.08 per share.

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