Investors reverse course on Red Hat’s results

On second thought, investors liked Red Hat’s fiscal first quarter results after all.

Shares of the Raleigh-based open source software company rose as much as 4 percent Friday – which marked a reversal in investor sentiment. At the end of the day shares fell back somewhat, closing at $79.30, up 81 cents, or 1 percent.

The company’s shares had dropped in after-hours trading Thursday after it reported its quarterly results. Although Red Hat bested analysts’ expectations for revenue and net income, Wall Street initially appeared fixated on the company’s billings – a leading indicator of future performance – which fell short of expectations.

Chief Financial Officer Charlie Peters noted during a conference call that many analysts hadn’t taken into account the impact of currency fluctuations. The 11 percent increase in bookings would have been 20 percent if not for the effect of weaker overseas currencies compared to the dollar, Peters said.

“Red Hat’s results reaffirmed our view that the company is becoming more strategic for its customers who are increasingly feeling comfortable signing large deals,” Mizuho Securities analyst Abhey Lamba wrote in a research note. “The company is attracting a greater portion of new workloads, which is helping its sales across the board.”

Red Hat’s revenue rose 14 percent to $481 million. Adjusted net income totaled $81 million, or 44 cents per share, up from $64 million a year ago.