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Red Hat Takes Netscape Enterprise

Red Hat kicked off its analyst day in New York today by announcing its was going to acquire parts of the Netscape Enterprise solution from AOL. The company will pay $20.5 million in cash in the deal, which is expected to close by the third quarter, according to regulatory filings.

The Netscape Directory Server is one part of the deal. It is an LDAP server that provides a network centralized registry for application and user settings, as well as policies and access control information. A number of Linux distributions, including Red Hat, already include the OpenLDAP open source project. Red Hat will likely include both in future distributions.

Netscape Certificate Management System, which complements the LDAP server by authenticating user identities and providing a degree of privacy, is also a part of the deal. The two products are expected to be integrated into the Red Hat stable during the next six to 12 months and will eventually be available under open source licenses.

"We have been interested in [the] technology for a long time," Matthew Szulik, chairman and CEO of Red Hat, said in a statement. "Directory Server and Certificate Management System have already been widely deployed in the enterprise and are mature pieces of infrastructure software. The technologies will provide a secure switchboard with certificates for all traffic in the open source architecture."

At the analyst day meeting, Paul Cormier, Ret Hat executive vice president of engineering, characterized the acquisition as, "... something that really opens up the gate for us."

AOL owned most of the Netscape assets since it acquired the company almost six years ago. It has since spun off the core development of the Netscape browser under the open source Mozilla Foundation.

Red Hat has been trying to restore its credibility since July when it announced it would restate three years' worth of financial earnings. The revelation sparked a flurry of class action suits alleging that the vendor misled investors. Red Hat has since fought back with strong quarterly results and a new CFO.

The company also announced a stock repurchase plan yesterday that would see Red Hat buying back up to $100 million of its securities.

"We believe that, based on current market prices, our stock is undervalued and that it is in the best interest of our shareholders for us to acquire shares in the open market," said Szulik. "In addition, our repurchase program will help to offset dilution associated with our employee stock plans."