It’s a Red Hat day in New York. Red Hat CEO Matthew Szulik will ring the bell to open the NYSE while a big red hat sits out front. Welcome to the NYSE.
The NYSE will be going all out to market the arrival of Red Hat on
the big board. The exchange will adorn its façade with a 10-foot fedora,
light up Times Square with Red Hat’s logo and place ads on
New York City taxicabs and investor publications.
Linux leader Red Hat had been on the rival NASDAQ exchange since its IPO in
1999. But starting today, it will take up residence on the NYSE, a move
that challenges the conventional wisdom that the NASDAQ is the predominant
exchange for technology companies.
Cornett expects that the move to the NYSE will also help reduce the stock’s volatility, and thus make more money, because of the way the exchange operates. In recent weeks the company has been hit by the double whammy of Oracle announcing it would undercut Red Hat and then Novell teaming with Microsoft a week later. “They have a large number of ancient boxes running throughout their
“You generally associate NASDAQ with technology, and NYSE wants to change
that, with emerging technology companies like salesforce.com
already on NYSE and now Red Hat,” Dion Cornett, vice president of investor relations at Red Hat, told internetnews.com. “Next-generation types like us are on NYSE and the legacy guys like Oracle and Microsoft get left behind on
NASDAQ.”
Cornett said that the NYSE first solicited Red Hat to make
the move, which is expected to give the company a higher degree of visibility than
it had on NASDAQ.
“We never could get the same level of visibility on the NASDAQ given the
dominance of Microsoft there, that we believe we will get on the New York
Stock Exchange.”
“On the NYSE trading happens by specialists that are dedicated firms that are
responsible for individual names and they act as a buffer for trading
activity around a particular stock,” Cornett explained. “On the NASDAQ, in
our case, we had as many as 30 market makers all moving in and out of the
stock. You end up with higher volatility, bigger swings in the stock and
more rapid fluctuations.”
The idea is that if Red Hat can reduce its volatility it can also reduce its
expenses.
The move to the NYSE may also yield a technological win for Red Hat.
According to Cornett the NYSE is in the process of upgrading all their IT
systems.
infrastructure. We’re very optimistic that as part of their
modernization that Red Hat will have a very significant role in that
effort.”
The move to the NYSE should not be seen as a slap in the face to the NASDAQ.
Cornett noted that Red Hat has had a very healthy relationship with the
NASDAQ since its initial public offering in 1999.
“It’s just that the opportunity to be with the brand leader of all the
global exchanges with a significant boost in terms of visibility and a
marketing push was just an offer too good to refuse.”
