Analyst Kirk Materne says he expects the company to generate enterprise subscriptions in line with guidance when it reports Sep. 20. The company will also name a new chief financial officer during its earnings conference call. He thinks the biggest risk to Red Hat is its potential decline in subscriber pricing. Accordingly, he trimmed the $205 million fiscal 2005 (Feb.) earnings per share estimate to $200 million, and cut the 27 cents earnings per share estimate to 26 cents. He sees 36 cents fiscal 2006 earnings per share on $305 million in revenue.
Materne also cut the $21 target to $16. Overall, he thinks Red Hat is still well positioned to show strong revenue and cash-flow growth, however, he thinks valuation is likely to remain in check until new a CFO is fully up and running.