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Red Hat profits soar

Graeme Wearden ZDNet.co.uk

Published: 22 Dec 2005 11:00 GMT

Enterprise open source firm Red Hat wowed the City on Wednesday when it reported its third-quarter financial results.

Red Hat announced that its total revenue for the three months to 30 November totalled $73.1m (£42m). This is a 44 percent increase for the same three months in 2004. Red Hat's profits for the quarter reached $23.2m, up from $10.8m.

The steep rise was driven by a 54 percent rise in subscription revenues, indicating that more companies are prepared to pay for open source software and associated support.

Red Hat said its strong results were partly due to firms replacing legacy equipment running Unix with new kit running Linux.

Chief executive Matthew Szulik told journalists that existing customers were doing more business with Red Hat. "Customers are increasingly willing to take chances on Red Hat for large new initiatives," said Szulik, according to Reuters.

On Tuesday, Red Hat announced that Skanska, a large Swedish construction conglomerate, is moving from Unix to Red Hat's Enterprise Linux product. Skanska said it expects to reduce its costs by up to 30 percent following the move.