Red Hat Plays Scrooge

You’d think a company named Red Hat would treat investors well at this time of year, but the stock acted more like Scrooge than Santa Claus on Thursday.

Red Hat shares tumbled 13.5% after the Linux provider reported in-line earnings of 6 cents per share. Sales surged 55% to $50.9 million — but that was less than the $51.5 million that analysts were looking for.

Red Hat’s guidance also failed to live up to expectations. The company said it expects fourth-quarter earnings of 6-7 cents a share on revenues of $55.5-$56.5 million. Analysts were looking for earnings of 7 cents on revenues of $58 million.

Analysts were also disappointed by slowing enterprise subscriptions and cash flow, and said the company may be facing tougher competition from Novell and Sun Microsystems . On the plus side, a rise in deferred revenue could mean stable pricing and renewals and a shift to longer-term subscriptions, analysts noted.

The broader market posted modest gains on mixed economic data, with durable orders and consumer sentiment rising, but new home sales falling and consumer spending rising less than expected.

The Nasdaq climbed 3 to 2160, the S&P 500 rose half a point to 1210, and the Dow gained 11 to 10,827. Volume declined to 956 million shares on the NYSE, and 1.43 billion on the Nasdaq. Advancers led 18-14 on the NYSE, and 17-13 on the Nasdaq. Upside volume was 59% on the NYSE, and 65% on the Nasdaq. New highs-new lows were 275-8 on the NYSE, and 155-15 on the Nasdaq.

Micron Technology slipped after missing revenue estimates, while PalmSource fell 3% on a warning.

Tibco rose 1% after the company beat earnings and revenue estimates.

Network Appliance fell 3% on a downgrade.

SI Tech gained 7% on news of a merger with Vishay .

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