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To: pcyhuang who wrote (602)	10/26/2006 10:22:52 PM
From: - with a K	Read Replies (1) \| Respond to of 4080

No position in RHAT but thought this should be posted as it helps explain the reason for the haircut today. Thursday October 26, 9:04 pm ET By Mike Baker, Associated Press Writer Red Hat's Future in Question After Oracle Announcement; Shares Fall RALEIGH, N.C. (AP) -- One move by rival Oracle Corp. has turned Red Hat Inc. from a celebrated leader in open-source software to a fragile underdog. Shares of Red Hat tumbled 24 percent Thursday on the news that Oracle will move aggressively onto Red Hat's turf by selling maintenance services for Red Hat products. Oracle's brawn threatens an undersized Red Hat, which has benefited from a relative shortage of competition in the Linux sector -- until now. "Red Hat needs a new business model fast," said Rob Enderle, principal analyst at the Enderle Group tech consulting firm. "Oracle's organization is vastly superior. They'll be providing a better product at a better price. Nobody can say right now whether Red Hat will even be able to survive." Unlike Microsoft Corp.'s market-dominating Windows operating system, Raleigh-based Red Hat distributes the open-source Linux system for free. The company makes money by selling service and support. Oracle CEO Larry Ellison announced Wednesday that his company will offer identical support services for Red Hat's products -- at a roughly 50 percent discount. "Oracle pretty much took Red Hat's entire business," Enderle said. "Of all the companies in software, Oracle's easily the scariest -- they're just so aggressive." Red Hat investors have long feared a hostile move from Redwood Shores, Calif.-based Oracle, which raked in $14.4 billion in revenue during its last fiscal year, dwarfing Red Hat's $278 million. Oracle says it has 7,000 employees in support services alone; Red Hat says it employs a companywide total of 1,800. When Oracle began hinting of a possible move into the Linux market -- a step likely aimed at shoring up database market share being taken by Microsoft -- Red Hat shares turned volatile. Before Red Hat's stock plummeted $4.68 to $14.83 in trading Thursday, the shares were already well off their May high of $32.48 on the Nasdaq Stock Market. Analysts issued a series of sharp Red Hat downgrades Thursday. Soleil Securities lowered its Red Hat price target to $11.50 from $19. Credit Suisse cut its outlook to $14 from $29. Terry Tillman, an analyst with Suntrust Robinson Humphrey, said Red Hat may become a takeover target and suggested that Oracle could be the buyer. "Is Red Hat's business under assault? Potentially. But because of the franchise they have, they'll survive," Tillman said. Red Hat Chairman Matthew Szulik played down Oracle's threat, saying Ellison, if anything, had boosted Linux's credentials and acknowledged Red Hat's technical leadership. The company also posted a response to Oracle's announcement on its Web site, trying to reassure customers and investors that Red Hat will be just fine alongside Oracle. But there was no mention of whether Red Hat would respond by lowering its prices. "The opportunity for Linux just got bigger," the company wrote. While Oracle's move threatens the bulk of Red Hat's subscription business, Red Hat also provides support for a comprehensive array of open source products, including through the recently acquired JBoss, provider of "middleware" that connects varying Web applications. Dennis Kekas, director of North Carolina State University's Network Technology Institute, which has a close relationship with Red Hat, said the company will have no trouble thriving in the ever-expanding open source market. "There's a lot of room out there for a lot of players to participate in the open source movement," Kekas said. "Red Hat's just too sophisticated and too strong to be threatened. They have built such a strong reputation."

To: pcyhuang who wrote (602)	10/27/2006 4:02:12 PM
From: pcyhuang	Respond to of 4080

RHAT -- Share/Debt Buyback Full Story: biz.yahoo.com pcyhuang

To: pcyhuang who wrote (602)	11/8/2006 8:03:56 AM
From: richardred	Read Replies (2) \| Respond to of 4080

Interesting development. Red Hat Message 22988111 Red Hat downplays Novell/Microsoft deal 11/5/2006 4:18:11 PM, by Ryan Paul In response to a recent agreement between Microsoft and Novell, Red Hat's corporate secretary Mark Webbink has predicted that Red Hat "will be the dominant player in the Linux market" a year from now, and that "by that time there won't be any other Linux players." In light of Microsoft's partnership with Novell and Oracle's ambitions of Linux support dominance, Webbink's statement doesn't seem all that realistic. In a recent interview with Search Open Source, Webbink downplayed the new relationship between Microsoft and Novell, claiming that the two companies have "gone off the road a bit" and arguing that Red Hat's approach to Linux support and stronger ideological ties to open source will ensure eventual triumph. He points out that the agreement between Novell and Microsoft involves intellectual property licensing, which he says represents a contradiction for Novell and a deviation from the conventional values of the open source community. Webbink thinks that "Novell has fallen into the trap of allowing Microsoft to do exactly what it wants to do, which is to trumpet IP (intellectual property) solutions and promises." According to Webbink, a company "can be either for freedom and collaboration," or "a different approach," but Microsoft and Novell "are trying to do both." The interview asks some good questions, and it is definitely worth a read for those interested in Novell's agreement with Microsoft. Let's examine some of Webbink's arguments and see how they hold up to scrutiny. Some of Webbink's arguments sound hyperbolic, but he makes some worthwhile points. Although many will dismiss his argument about freedom as mere rhetoric, it is worth noting that, in many cases, enterprise Linux adoption is heavily motivated by a desire for flexibility and freedom from vendor lock-in. Webbink is implying that Novell risks alienating customers if the company's intellectual property agreements with Microsoft lead to limited choice for end-users and decreased involvement of the open source community in Novell's projects. The argument is valid, but is it sound? There is no evidence yet that the intellectual property agreements will have any tangible detrimental effect. The arrangement has certainly created some controversy and uncertainty about Novell's intentions, but it is unclear at this point what sort of impact it will have on Novell's products. Some are concerned that Novell has entered into this agreement in order to validate inclusion of Microsoft's intellectual property in Mono, the open source .NET interpreter. Webbink points out that community concerns have led the Free Software Foundation's legal advisor to question "whether or not [Novell and Microsoft's] partnership was in violation of the GNU Public License." Mono developer Miguel de Icaza has responded to community concerns by pointing out that the open source .NET implementation does not infringe on any of Microsoft's patents, that the product can still be safely included in other Linux distributions besides SUSE, and that Mono developers will continue to ensure that Mono never includes or infringes on Microsoft's intellectual property. Citing Microsoft's attempts to fund SCO's legal assault on the open source operating system, many Linux enthusiasts are convinced that the proprietary software company's agenda is predatory and that its agreement with Novell reflects a divide-and-conquer strategy. While this may be true, I think it's more likely that Microsoft is responding to customer demand for Linux virtualization in a Windows environment. For Microsoft, Novell is the obvious choice for this sort of alliance because the company actively promotes broader adoption of .NET technology by financially supporting development of Mono. I think it would be naive to believe that Microsoft is interested in anything other than competition, but that doesn't necessarily mean that the company is still determined to destroy Linux. We have seen numerous changes at Microsoft in the past few years, and it is obvious that the company is at least starting to move towards open standards and interoperability. How will Microsoft's agreement with Novell impact other Linux vendors? I think that it could give SUSE an edge in the virtualization arena, particularly in enterprise environments where users need to run virtual Linux instances on a Windows host. The partnership could also potentially make SUSE look like a safer choice for some companies that are concerned about intellectual property issues. Red Hat is combating that particular advantage by offering stronger indemnification. Ultimately, I think that Red Hat can adequately compete with Novell if the company can convince customers that its stronger commitment to open source ideals and distance from the patent minefield will provide users with more choice and greater flexibility. Will Red Hat be the only Linux distributor left in one year? Don't hold your breath—an alien invasion is probably more likely. arstechnica.com