(Corrects price in second paragraph.)
Red Hat Inc. (RHT:US) reached the highest level in 12 years after fiscal fourth-quarter profit and sales topped analysts’ estimates, helped by buoyant corporate demand for its Linux software.
Red Hat soared 20 percent to $61.43 in New York for the highest closing price since March 2000, after the Raleigh, North Carolina-based company released its earnings yesterday. Red Hat, which went public in 1999, was the best performer in the Standard & Poor’s 500.
The company was surprised by demand for its Red Hat Enterprise Linux software from corporations preparing to move more applications to the cloud, Chief Executive Officer Jim Whitehurst said in an interview. Red Hat expects to keep expanding its margins, he said. Profit for the current fiscal year will be as much as $1.20 a share, the company projected, exceeding the average analyst estimate (RHT:US).
“We were all shocked at how well RHEL did,” Whitehurst said. The growth has been led by companies wanting to modernize their programs before moving them into the cloud, where they can be delivered to corporate users over the Internet.
“The drivers have changed,” he said. “It was probably costs, costs, costs a couple of years ago.”
Excluding some costs, profit was 29 cents in the period ended Feb. 29, Red Hat said yesterday in a statement. That beat the 27-cent average analyst projection in a Bloomberg survey. Sales increased 21 percent to $297 million, compared with the $291.2 million average estimate.
Fourth-quarter net income rose to $36 million, or 18 cents a share, from $33.5 million, or 17 cents, a year earlier, the company said yesterday. Red Hat also said it will buy back as much as $300 million of its stock.
The company plans to add about 1,000 employees this year as it expands engineering, sales and marketing, Whitehurst said.
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