Red Hat exec resigns just before results
Published: 15 Jun 2004 10:45 BST
Red Hat chief financial officer Kevin Thompson will resign, the Linux seller announced on Monday, raising eyebrows three days before its scheduled announcement of quarterly financial results.
Thompson is leaving after four years at Red Hat to "pursue other interests," though he'll continue as CFO until a successor is found "to help provide a smooth transition," Red Hat said.
Some analysts said the timing of the announcement was disturbing. "This is a surprise," said Katherine Egbert, a securities analyst at Jeffries & Co. "Coming three days before the quarter puts questions in investors' minds."
Brooks Gray of Technology Business Research was similarly apprehensive. "It's certainly a red flag, and the company needs to be watched closely, as its results are detailed this week. At the same time, there are certainly a number of executive positions opening up through the industry, particularly the software industry, so Thompson could certainly be looking to jump to a larger ship."
In a statement, Thompson said, "My nearly four years at Red Hat have been personally and professionally rewarding... The pace of progress at Red Hat has been incredible, though. So I now look forward to the opportunity to spend some additional time with my family."
Red Hat didn't immediately respond to questions about the announcement's timing.
In March, the company reported net income of $5m (£2.76m) and strong growth in its plan to sell annual subscriptions to its Red Hat Enterprise Linux. The company is scheduled to report earnings for its first quarter of fiscal 2005 on Thursday.
Red Hat shares fell $1.36, or 5 percent, to close at $25.66. In after-hours trading, when the resignation was announced, it dropped a further $3.97, or 15 percent, to $21.69, according to Inet ATS.
Red Hat, the top seller of Linux, faces competition from Novell, Microsoft, Sun Microsystems and others. The company is also involved in a legal tangle with the SCO Group over Unix and Linux.
Red Hat raised about $600m in a bond offering in January. In December, the company acquired Sistina Software.
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