Red Hat CEO Takes Flight

Red Hat CEO Matthew Szulik has announced that he is stepping down as President and CEO. Szulik, who cited personal reasons for the decision, will remain with Red Hat as Chairman of the Board.

Szulik is being replaced by former Delta Airline Chief Operating Officer James Whitehurst. The surprise Red Hat executive shift comes on a high note for Szulik. Red Hat just reported third quarter earnings that exceeded analysts’ expectations.

“For many months my family has been challenged by serious health issues. It became clear to me that I needed to direct the same level of attention and effort in support of my family at this time that I have invested in Red Hat for nearly a decade,” Szulik said on Red Hat’s quarterly earning call. “For me, I wanted to find an executive with an open mind and an unencumbered historical perspective. Jim has proven business development skills where he was the leader of the creation of Orbitz inside of Delta, which resulted in billions of dollars in value for Delta Airlines.”

The announcement came as Red Hat said net income for its third fiscal quarter of 2008 was $20.3 million ($0.10 per diluted share), a 39 percent increase over its profit of $14.6 million (or $0.07 per diluted share), in the year ago quarter.

Revenues also rose at the Linux vendor to $135.4 million, an increase of 6 percent over the second quarter tally of $127.3 million the same time last year. The bulk of the revenue for Red Hat came from subscriptions to its Linux software, which tallied $115.7 million, up from $109.2 million for the second quarter of fiscal 2008.

Szulik joined Red Hat founder Robert Young in 1998 and led the company through its blockbuster IPO in 1999. Szulik shifted gears in recent years focusing on Red Hat Enterprise Linux (RHEL) and dropping Red Hat’s namesake commercial Linux (Red Hat Linux), which has been replaced by the community Fedora project. Perhaps his biggest gamble was the acquisition of JBoss in 2006 for $350 million.

Red Hat recently announced a new Real Time Linux platform as well as a series of Linux automation initiatives to bring RHEL to appliances as well as an on demand compute model.

Szulik has also not relented in the face of mounting competitive pressures to buy into Microsoft’s Patent Protection program that competitor Novell has bought into. For example, during Red Hat’s first quarter conference call for fiscal 2008 earlier this year, Szulik noted that Red Hat wasn’t “religious” about Microsoft, referring to the patent deal.

“I take pride when customers and industry types comment to me that the people of Red Hat are ‘different’,” Szulik wrote in a blog post announcing his decision to step down. “Not like the cylons who have come to dominate the industry of technology.”

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