First Albany Cuts Red Hat Estimates

Analyst Mark Murphy says the open source software company's financial model is still in flux

First Albany cuts estimate for Red Hat (RHAT ).

Analyst Mark Murphy says third-quarter results were in line with guidance, but $51 million revenues were slightly below the $52 million consensus. Also he says third-quarter Enterprise Linux unit shipments totaling 132,000 came in below his expectations.

On a more favorable note, he says the company had its best bookings quarter ever in the third-quarter, representing a stronger tone of business, vs. the prior two quarters. He also cites a material increase in ASPs.

Nonetheless, with the company's financial model still in flux, Murphy says some Street estimates are unreasonably high, and cuts his own 25 cents fiscal 2005 earnings per share (ending February) estimate to 24 cents and $196.3 million revenue estimate to $194.6 million. He rates the stock a buy.

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