Technology
How Analysts Reacted to Red Hat Earnings: Not Well
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Open-source software vendor Red Hat Inc. (NYSE: RHT) reported better-than-expected earnings and revenues after markets closed Tuesday evening, but the stock traded down more than 3% Wednesday morning. The company’s outlook, while not in the “wow” category, was also above expectations.
The downturn in the share price has been attributed to the company’s billings for the quarter. A company’s billings are the total of its revenues and its deferred revenues. Red Hat reported quarterly revenues of $544 million and deferred revenues of $220 million.
Red Hat does not provide quarterly calculations or forecasts of its total billings, but that doesn’t stop analysts from calculating their own numbers. A Credit Suisse estimate had billings totaling $768 million, compared with the reported total of $764 million. An average estimate of 12 analysts came in at $771 million, according to a report at Barron’s.
Now $7 million is less than 1% of billings, but in the fourth-quarter deferred revenues were lower than a year ago by some $4 million, and for the year deferred revenues were down by about $22 million compared with the year-ago period.
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