Blue chip sales put Red Hat in black

Linux firm is flush with cash now, but remains wary of predicting a rosy future as the IT slump continues
Written by Graeme Wearden, Contributor

Red Hat, the leading distributor of Linux, has bucked the current downturn in the technology sector by making its first ever profit last quarter -- thanks to increased sales to corporate customers.

In the three months to 31 May, Red Hat made a profit of £430,000 on sales of £18.3m. For the same period the year before it made a loss of over £2.6m on sales of £15.5m. The company's improved performance was partly due to a number of major deals.

"In an increasingly difficult IT environment, Red Hat delivered a profit and generated positive cash flows for the first time," said Matthew Szulik, Red Hat's president and chief executive officer, adding that customers were continuing to move mission critical applications onto open source platforms.

In the last quarter, Red Hat helped to create Ericsson's Webscreen -- a mobile Internet device -- as well as doing deals with the likes of NEC and Nortel. In partnership with Dell, it won several large corporate contracts, which included supplying open source solutions to BEA Systems, AT&T and at least five US universities.

Despite its improved performance, Red Hat warned that it could be facing tricky conditions later this year. Many customers use specialised versions of Linux, and the current slump in the chip sector could harm Red Hat's sales figures.

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