Red Hat shares jump on Dell pact
Shares of Red Hat took off Monday after the company said it extended a strategic alliance with Dell Computer.
In early trading, Red Hat was up 15 7/8 to 216 7/8. Red Hat shares were up 1,335 percent since the company went public in August. Red Hat shares have been on a tear as the company extends its first mover advantage and cashes in on Wall Street's Linux love affair.
Red Hat has been the primary Linux stock for Wall Street and the Dell deal will gives it a nice head start on the competition. Two of Red Hat's competitors go public this week. Andover.net (Proposed ticker: ANDN) and VA Linux (Proposed ticker: LNUX) will launch IPOs.
Red Hat and Dell extended their strategic alliance with a worldwide service and support agreement. Under the deal, Dell will factory-install Red Hat Linux on all future and currently shipping Dell PowerEdge server models. Dell was the first to install Red Hat Linux on its servers and now will give Red Hat more distribution. Red Hat Linux will be installed across Dell's entire server line. Factory installation of an operating system (OS) customises each server to exact customer specifications, the companies said.
Matthew Szulik, president and CEO of Red Hat, said the Dell "seal of approval" will go a long way to making Linux a key player in corporations. "Over the last year, we've seen increasing demand for Red Hat Linux, particularly from Internet Service Providers, government agencies, universities and businesses of all sizes," said Jack Steeg, vice president of alliances, for Dell's enterprise systems unit, in a statement.
"Our shipments of Red Hat Linux have more than doubled over the past quarter and we expect this trend to continue and even accelerate," he said.
The worldwide service and support pact gives Dell customers a combination of free and discounted services and support. Dell's global customers can now get service and support for Red Hat Linux in all the major business regions of the world. Red Hat recently opened a series of customer support centres to provide support for Europe, Middle East, Africa, Japan and the Asia Pacific region.
Dell customers get 90 days of Web and phone support from Red Hat; discounted Red Hat professional services, including installation assistance where necessary; and 180 days of Red Hat subscription services, which automatically notify administrators via email of new OS versions and patches.
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