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Red Hat loss narrows
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September 14, 2000: 5:04 p.m. ET
Linux software distributors beats Street estimate by a penny per share
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NEW YORK (CNNfn) - Red Hat Inc., a leading distributor of the Linux operating system, reported a fiscal second-quarter operating loss that was a penny narrower than Wall Street had expected.
Excluding special items, Red Hat reported a loss of $1.9 million, or 1 cent per share, on sales that rose 76 percent to $18.5 million. That compares with an operating loss of 6 cents per share on sales of $10.5 million during the same period last year.
Analysts polled by earnings tracker First Call has expected Red Hat (RHAT: Research, Estimates) to post an operating loss of 2 cents per share during the most recent quarter.
Including non-cash charges and one-time acquisition expenses, Red Hat said its net loss for the quarter totaled $15.7 million, or 10 cents per share, compared with a loss of $4.8 million, or 7 cents per share a in the year-ago period.
Red Hat is one of a growing number companies that specialize in software and solutions based on the Linux operating system. Linux is an "open-source" operating system, which means that it is in the public domain and open to modifications by independent developers.
The company competes with the likes of VA Linux (LNUX: Research, Estimates) and Caldera Systems (CALD: Research, Estimates).
 Executives at Red Hat in Research Triangle Park, N.C., attributed the quarter's strong results to the increased popularity of the Linux platform, which has been gaining strength in the server market, especially among dot.coms.
"Demand for open source solutions is expanding globally across our lines of business, enterprise, small and medium sized business, and equipment manufacturers," said Matthew Szulik, Red Hat's president and chief executive. "We continue to execute to our plan of revenue growth while improving our operating efficiency."
During the most recent quarter, the company said its gross margins increased to 58 percent, a 3.8 percentage point improvement over the prior quarter.
Red Hat shares added $1.12 to $25.25 in regular trading ahead of the earnings announcement. They fell 88 cents to $24.38 in after-hours activity. 
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