Red Hat Aiming To Double JBoss Business

Linux vendor Red Hat, is re-organizing itself into three lines of business
in order to better capitalize on market opportunities. If the recent
quarterly results are any indication, Red Hat is doing a fine job already of
cashing on its Linux business.

That said, Red Hat is still aiming to make more money from its other
businesses, most notably its JBoss middleware business that it acquired in
2006 for $350 million.

“The rate of JBoss bookings has not met my expectations,” Red Hat CEO
Matthew Szulik said on the company’s second fiscal quarter 2008 conference
call. “We expect it could double RHEL [Red Hat Enterprise Linux], so far
it’s about the same. We will accelerate JBoss growth in the second half of
the year.”

Even with Szulik’s missed expectations on JBoss, Red Hat has little to be
ashamed off with its fiscal second quarter 2008 ending August 31, 2007.

Red Hat said its net income for its second fiscal quarter of 2008 was $18.2
million ($0.09 per diluted share), which was an improvement over the first
quarter where Red Hat reported $16.2 million ($0.08 per diluted share). The
improvement was even more pronounced when compared against Red Hat’s second
fiscal quarter of 2007 with reported net income of only $11.0 million ($0.05
per diluted share).

Revenues also rose at the Linux vendor to $127.3 million for the second
quarter, an increase of seven percent over the $118.9 million reported
for the first quarter of fiscal 2008. Compared against the prior year, the
revenue gain was an increase of 28 percent.

The bulk of the revenue for Red
Hat came from subscriptions to its Linux software, which came in at $109.2
million for the second quarter, representing a 29 percent improvement over
the second quarter for fiscal 2007.

Szulik commented that Red Hat is transitioning from a single-product
company to a multi-product company. As part of that transition, Red Hat has
now been organized into three lines of business. Those business lines
include infrastructure (which includes Red Hat’s Enterprise Linux),
middleware (including JBoss) and online services. Each line of business will
be led by general manager that is compensated based on the profitability of
their business.

On the online services side, Szulik revealed that in the next 30 days, Red
Hat will be rolling out its integrated partner portal. The portal will
enable partners to sell their services directly from the Red Hat site. The
idea is to integrate it with Red Hat’s
Exchange (RHX) model to give developers access to global markets and
allow them to monetize their work through Red Hat.