Banking, finance, and taxes

Red Hat Completes its Transition to the NYSE....Why?

Stock Tickers: RHT, RHAT, MSFT, ORCL, NOVL

Red Hat, the leader of a standalone Linux O/S and Office Suite for in-store boxed software suites, has completed its transition from a NASDAQ listing to the NYSE as of this morning.  You can jettison the RHAT ticker for the new RHT ticker on NYSE.

The CEO, Matthew Szulik, said (in a CNBC interview from NYSE floor, with all of them wearing corny red gangster hats of course) that its transition was to give an investor brand as a leader on a global basis for open source software boxed packages and he was commenting how bright the company’s future is.  The CEO also said it is still too early to tell if Oracle’s product at half the price was going to hurt them and he noted a research report saying they would see more growth.

A transition from NASDAQ to NYSE is fine for certain companies, but for a company like Red Hat it just doesn’t seem to make much sense. Maybe the company was trying to shake out the shorts in the name, but this just doesn’t telegraph huge growth out of the company.  That may not be far off now that Microsoft (MSFT) has started signing Linux pacts with Novell (NOVL) and has other Linux deals on the table (Red Hat rebuffed the offer); and as competition from Oracle (ORCL) and others.

As of last month, Red Hat saw its short interest grow from 15.8 million shares in October up to 20.4 million shares.  This now represents 10.8% of its float.  The stock closed yesterday at $16.22, and shares were at $16.34 on last look.  Time will tell, but this sort of transition is not usually one that active traders of tech stocks usually like to see.

I don’t know why I keep thinking Red Hat sounds so much like Dead Cat, but they came up with their own name.  Hopefully this works for them, because they have some pretty strong head winds in their path.

Jon C. Ogg
December 11, 2006

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