Red Hat in the red as outlook, billings disappoint
SAN FRANCISCO (MarketWatch) -- Investors turned their ire toward
Red Hat (RHT) pulled back from its early low point, but was still down by $2.73, or 5%, at $53.77. The cause of the retreat was Red Hat giving a disappointing outlook for its second quarter, as well as signs that new software bookings aren't growing as well as expected.
"Our calculations indicate that the business momentum of Red Hat moderated in the [first] quarter," said John DiFucci, of J.P. Morgan, in a research note. DiFucci said that Red Hat's subscription billings grew 16% in the quarter, to $310 million. Wall Street analysts had estimated Red Hat's billings would grow to about $319 million.
DiFucci said Red Hat billings increase "was slower than the growth rates in the previous five quarters." Following Red Hat's results, DiFucci said he continues to remain cautious about the outlook for global IT spending.
Adding to the sentiment toward Red Hat was the company's second-quarter forecast. The company said it expects to earn 28 cents to 29 cents a share on between $320 million and $322 million in revenue for the business period. That outlook fell short of the estimates of analysts surveyed by FactSet Research, who had earlier forecast Red Hat to earn 29 cents a share on $331 million in revenue for the quarter.
That forecast prevented Red Hat from getting the benefits of what was an upbeat first-quarter report.
For its fiscal first-quarter, Red Hat reported a profit of $37.5 million, or 19 cents share, on revenue of $314.7 million, up from earnings of $32.5 million, or 17 cents a share, on $264.7 million in revenue in the same period a year ago. Excluding one-time items, the open-source software provider would have earned $58 million, or 30 cents a share.
Those results topped the estimates of analysts surveyed by FactSet Research, who had forecast Red Hat to earn 27 cents a share on $310.8 million in revenue.