Friday, 23 December 2016 12:03

Red Hat fails to meet 3Q expectations, shares fall

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The open source company Red Hat has reported earnings of US$615 million for the third quarter of its fiscal year 2017, an increase of 18% year-on-year.

However, given that analysts' expectations were US$618.5 million, the company's stock fell 13.9% in after-hours trading to US$68.70.

Red Hat also announced that its chief financial officer and executive vice-president Frank Calderoni would be leaving the company in late January 2017 to take up the position of chief executive at an "another company".

Red Hat president and chief executive Jim Whitehurst said the company's vice-president of finance and accounting, Eric Shander, would step into Calderoni's position temporarily until a decision was taken on a permanent replacement.

In the third quarter, Red Hat earned US$543 as subscription revenue, an increase of 19% year-on-year.

The company made a profit of US$68 million for the quarter. This compared favourably to the US$47 million made in the corresponding quarter of the previous fiscal year.

Red Hat said it expected annual revenue to be between US$2.397 billion and US$2.405 billion.

The projection was slightly down on what it had forecast at the end of the second quarter, when it had predicted annual revenue of between US$2.415 billion and US$2.435 billion.

Said Whitehurst: "Enterprise and service provider customers continue to adopt a hybrid cloud strategy for developing, deploying and managing the life-cycle of their critical applications.  

"Red Hat is uniquely positioned to address this need. In aggregate, customers utilising our cloud-enabling technologies either on-premise or in the public cloud are spending more with Red Hat than customers that have not yet embraced our cloud-enabling technologies."

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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