Hats off to Linux vendor's profitability

Red Hat edges into the black

Linux developer Red Hat has made it into the black for the first time ever, posting a profit for its fiscal first quarter.

For the period ended 31 May, the company made a profit of $600,000 (£425,000). Turnover was $25.6m, an increase of 18 per cent compared with the same period last year.

"Today marks a milestone for Red Hat in its mission to be a defining technology company in the 21st century," said Red Hat chief executive Matthew Szulik. "It is possible to make money as an open source company."

In an "increasingly difficult IT environment" Red Hat managed to deliver a profit and generate positive cashflow, Szulik said. "Companies continue to migrate their platforms to Red Hat Linux and to adopt open source solutions for mission critical applications."

However, Red Hat is refusing to make financial forecasts for its next quarter. Instead it said that some major new contracts, including those with Nortel and Cisco, as well as the roll-out of its subscription-based services offerings, are driving major consulting and services turnover.

Pete Jewell, analyst programmer at software developer and Linux reseller Example Systems, said he has noticed an increase in the uptake of Linux among UK firms.

"As far as we are concerned, Linux is very reliable and will run on any hardware," he said. "Two years ago it was difficult to persuade companies to take on Linux, but times have changed."

Earlier this year, Red Hat launched a joint 'Blue on Red' channel programme with IBM, which saw resellers selling Red Hat Linux-configured versions of IBM's Intel-based eServer xSeries boxes.

At the time, Richard Warren, director of reseller Real Solutions, claimed that the Linux market would only get bigger.