Red Hat advances after in-line earnings, cloud acquistion

Open source software provider Red Hat (RHT) is climbing after the company reported adjusted third quarter earnings per share of 29c, in-line with analysts' expectations. Red Hat's third quarter revenue of $344M exceeded consensus forecasts for $337.9M. The tech company estimated that its fiscal year 2013 earnings per share would be $1.16-$1.17, which was also near analysts' consensus estimate. Meanwhile, Red Hat announced that it would acquire enterprise cloud management company ManageIQ for about $104M in cash. Red Hat estimated that the deal would cause its operating expenses to increase by about $2M per quarter, while its stock-based compensation and amortization expense would increase by approximately $2M per quarter. "ManageIQ offers robust features, including orchestration, policy, workflow, monitoring and chargeback," said Red Hat President Paul Cormier. In a note to investors earlier today, RBC Capital analyst Matthew Hedberg wrote that the company reported strong third quarter results. The ManageIQ deal is positive "at first glance," as the acquisition will help Red Hat compete in the important cloud/virtualization management space, Hedberg believes. Red Hat's long-term outlook is upbeat, wrote the analyst, who maintained an Outperform rating on the shares. In early trading, Red Hat climbed $2.18, or 4.14%, to $54.79.

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