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Red Hat Drops on Earnings Miss, Weak Forecast

Q4 billings were $454 million, compared to estimates of $471 million

Red Hat, the largest Linux seller, came up shy of revenue expectations Wednesday when it posted its fiscal fourth quarter ended February 28.

Its shares dropped roughly 14% after-hours then stabilized around minus 4% or $49.19. Before the Thursday open it was down 5.4%.

In the quarter its revenues increased 17% to $347.9 million. The pundits were looking for $349.4 million.

Earnings were up 23% to $43 million or 22 cents a share before charges. Non-GAAP they amounted to 36 cents a share. Wall Street only expected 30 cents.

Q4 billings were $454 million, compared to estimates of $471 million.

Q4 subscription revenue came to $303 million, up 19% year-over-year, which means its full fiscal-year subscription revenue topped a billion for the first time.

Backlog was better than $280 million, up 40%.

The company, which says it closed a record number of deals in excess of $5 million-$10 million in the quarter and now provide solutions to over 90% of Fortune 500, still blamed sales deferred because of the economy.

Observers cited the deepening recession in Europe and tax increases in the US.

Red Hat said it made acquisitions in storage, cloud computing, management and Big Data that should turn to its long-term advantage.

The company figures it can return 30 cents-31 cents this quarter, less than the 32 cents Wall Street was counting on. Sales should be $358 million-$361 million, off from the $366.4 million estimate.

For the full year, the company sees revenue of $1.51 billion-$1.54 billion, and EPS of $1.31-$1.35, which is below the consensus of $1.38 on $1.55 billion.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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