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Technology Stocks : Red Hat Software Inc. (Nasdq-RHAT) -- Ignore unavailable to you. Want to Upgrade?

To: Knight who wrote (1484)	8/15/2000 6:06:40 PM
From: Boplicity	Read Replies (2) \| Respond to of 1794

Red Hat (RHAT) 24 +2 3/16: Stock rallied on nearly 2.7x average volume on news that Motorola (MOT) to package and market Red Hat's operating system with Motorola's Advanced High-Availability Software for Linux (HA-Linux) offering, which will be shipped with Motorola's carrier-grade high-availability embedded computing platforms... RHAT also entered agreement with IBM Corp (IBM) to jointly market, distribute and support bundled IBM, Lotus, Tivoli and Red Hat software offerings.

To: Knight who wrote (1484)	9/15/2000 12:41:01 PM
From: GVTucker	Read Replies (2) \| Respond to of 1794

How can RHAT succeed? Think of ADBE. The basic version is free to all. RHAT gives away their software, but will be able to sell accompanying services and higher level software to support the basic O/S. The key here is how to maintain some sort of competitive advantage. RHAT, as a sort of first mover in bringing Linux to the corporate mainstream, has name recognition and scale that the other providers do not have. This is self reinforcing, as RHAT can then attract talent to support large enterprise, a key in keeping the revenue growth going. Can a services-based company like RHAT get their gross margins in the 50-60% range? Yesterday's earnings report showed substantial gross margin improvement, 380 bp, backing what has been management's contention. The stock is getting beaten up today primarily because software sales came in lower than expected. This doesn't worry me all that much, as long as the services side continues to do well.