Red Hat Rises on ManageIQ Deal as Sales Beat Estimates
Red Hat Inc. (RHT), the largest seller of Linux operating system software, rose in late trading after reporting third-quarter sales that exceeded analysts’ estimates and saying it plans to buy cloud software company ManageIQ Inc.
Red Hat rose 4.5 percent after the company yesterday reported sales of $343.6 million in the period that ended Nov. 30. Analysts had on average projected sales of $338.1 million, according to data compiled by Bloomberg. Excluding certain items, profit was 29 cents a share, meeting the average projection compiled by Bloomberg.
As companies step up purchases of servers and databases to store and analyze information flowing through corporate systems, they’re relying on Red Hat to provide the services needed to keep its version of free Linux software updated. Subscription sales rose 19 percent, Red Hat said.
Billings, a predictor of revenue, gained 18 percent, according to data compiled by Bloomberg. That exceeded the 15 to 16 percent gain that analysts had projected, according to Abhey Lamba, an analyst at Mizuho Securities USA Inc.
Shares of Raleigh, North Carolina-based Red Hat climbed to $54.99 in New York, the highest closing price since Oct. 5. The shares are up 33 percent this year.
The acquisition of closely held ManageIQ for $104 million in cash will give Red Hat software for managing cloud networks that let customers store programs and data in server farms and access them over the Internet.
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