Reuters: Global Markets: Redhat shares fall on weak results

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Redhat shares fall on weak results Jun 21st 2012, 12:46 Thu Jun 21, 2012 8:46am EDT (Reuters) - Shares of Red Hat Inc (RHT.N), the world's largest commercial distributor of the Linux operating system, fell 10 percent before the bell after the company's quarterly billings growth disappointed analysts. On Wednesday, the company said a weak economy hurt billings in the first quarter and is likely to impact growth going forward. Red Hat's first-quarter billings growth of 16 percent was below the 20 percent analysts had estimated, mainly due to foreign currency headwinds, Susquehanna Financial Group analyst J. Derrick Wood wrote in a note to clients. Wood cut his price target on the stock to $65 from $67. Red Hat's Linux operating system is a major competitor to Microsoft Corp's (MSFT.O) Windows in corporate markets, especially on servers. "The business momentum of Red Hat moderated in the quarter ... This was slower than the growth rates in the previous five quarters," J.P. Morgan analyst John DiFucci said. The strengthening dollar also led the company to trim its full-year revenue forecast to between $1.32 billion and $1.34 billion, from $1.34 billion to $1.36 billion. Red Hat gets about 40 percent of its revenue from outside the United States. However, analysts remain confident of the company's long-term performance as they see demand trends remaining strong. "While the stock may correct near term, we expect that the feedback from customer and vendor checks at Red Hat's annual customer event in Boston next week will show that demand in the core Red Hat Enterprise Linux business remains strong," BMO Capital Market's Karl Keirstead said. Shares of the Raleigh, North Carolina-based company, which have gained 11.5 percent in the last three months, were down 10 percent on Thursday before the bell. They had closed at $56.50 on Wednesday on the New York Stock Exchange. (Reporting by Vidya P L Nathan in Bangalore; Editing by Sreejiraj Eluvangal) Link this Share this Digg this Email Reprints

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