Red Hat Falls After Billings Miss Estimates, Analyst Says

Red Hat Inc. (RHT), the largest seller of the open-source Linux operating system, fell the most in six months after reporting first-quarter billings that missed some analysts’ estimates.

The shares of Raleigh, North Carolina-based Red Hat declined 6.2 percent to $53 at the close in New York, the steepest drop since Dec. 20. The company also gave a second- quarter revenue forecast that trailed the average of estimates compiled by Bloomberg.

Billings, a predictor of revenue, were $310 million in the quarter ended May 31, falling short of the $319 million average analyst estimate, said Abhey Lamba, an analyst at Mizuho Securities USA Inc. Billings increased 16 percent from a year earlier, while analysts predicted 20 percent growth on average, according to Morgan Stanley.

“My feeling is it’s related to currency and a weakening macro-economy,” said Lamba, who recommends buying the shares.

First-quarter billings also increased at a slower rate compared with the previous quarter, which posted a 31 percent increase.

Investor concerns about billings overshadowed first-quarter earnings. Red Hat posted profit of 30 cents a share, excluding some items, exceeding the 27-cent average estimate compiled by Bloomberg. Revenue increased 19 percent to $314.7 million, the company said in a statement yesterday. Analysts anticipated $310.8 million.

Net income rose 15 percent to $37.5 million, or 19 cents a share, from $32.5 million, or 17 cents a year ago.

For the second quarter, the company said profit will be 28 cents to 29 cents a share. The top end matched the average of estimates compiled by Bloomberg. Sales will be $320 million to $322 million, Chief Financial Officer Charles Peters said on a conference call yesterday. That trailed the $330.9 million average prediction.

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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