Red Hat's earnings dropped 30% to $16 million, eight cents share, in its fourth quarter ended in February. Revenue was up 18% year-over-year but up only 1% sequentially to $166.2 million.

The company's 22-cents-a-share non-GAAP income was two cents better than expected thanks to cost cutting and stock buybacks that lowered the number of shares outstanding and so boosted EPS. Wall Street thought it would clear $167 on the revenue side.

Red Hat said subscription revenue for the quarter was $139.4 million, up 14% year-over-year and 3% sequentially. It said all of its top accounts renewed with a revenue value of 132%.

Its margin on subscriptions worked out to 94%. Its overall gross margin was 86%.

For the full year, revenue was $652.6 million, up 25%, and subscription revenue was $541.2 million, up 20%.

The company said deferred revenue at the end of the fiscal year came to $543.1 million, up 15% year-over-year and 8% sequentially.

Billings during the quarter topped $200 million, 44% direct, and it said it brought in more than 100 deals in excess of $250,000. Apparently it also got three deals worth $5 million and 18 worth a million. JBoss sales are evidently picking up, at least in some of its larger accounts.

Red Hat claims its value proposition is compelling given the economy. However, that same value proposition continues to deny it revenues of a billion dollars a year.

CEO Jim Whitehurst, on board a year now, said the company would put its shoulder into weaning folks off of free Linux software this fiscal year. He said their number "dwarfs" those paying for Red Hat software.

In the fourth quarter Red Hat managed to get one free-to-paid multi-year crossover account worth, he said, multimillions of dollars. The account is now one of its top 30 customers.

Red Hat is also hoping to push deeper into the mainstream this year and grow market share. It wants to expand its channel play too.

In its last fiscal year it said it picked up 40,000 new customers, most of them obviously small.

Despite the economy it's guiding to double-digit growth of 10%-13% and forecasting revenues of $720 million-$735 million for the year, returning non-GAAP earnings of 58 cents-63 cents a share. For the quarter it's projecting revenues of $171 million-$173 million.

It's got $846.1 million in the bank and practically no debt. It has 2,900 people.