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
June 20 (Bloomberg) -- Red Hat Inc. fell in extended trading after reporting first quarter billings that may have missed some analysts’ estimates. Cory Johnson and Adam Johnson report on Bloomberg Television's "Street Smart." (Source: Bloomberg)
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