Analyst: Red Hat doesn't sweat Microsoft-Novell, Oracle

Red Hat has its share of battles: Microsoft's partnership with Novell to distribute SUSE and Oracle targeting Linux support. But four months after these alleged Red Hat killers launched they have yet to land a body blow.

That's the conclusion of Jeffries analyst Katherine Egbert. She upgraded Red Hat shares to a buy from a hold. Egbert reports:

• Red Hat shares have been mistakenly hurt by Oracle and Microsoft's forays into enterprise Linux. The rub: "We see little evidence that these giants have had a material adverse impact on Red Hat Enterprise Linux. We note that Oracle in particular has yet to announce a significant customer for Unlimited Linux, despite its much lower prices," says Egbert. In addition, Microsoft's deal with Novell seems to be expanding the enterprise Linux market by landing customers like Wal-Mart. 
• "Our checks indicate Red Hat Enterprise Linux 4 sales are strong," says Egbert. "We are hearing strength both domestically and internationally."
• Red Hat Enterprise Linux 5 is due next month. That launch is likely to fuel a new product cycle for the company. "We expect its virtualization features to be well received," says Egbert.

Overall, it's too early to say Red Hat is totally in the clear, but Egbert has a point: The obit writers were premature.