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[jerryp]

The shares rose lately by $3.98, trading at $20.48, after Red Hat reported late Wednesday a net profit of $16.7 million, or 9 cents a share, up 49% from $11.8 million, or 6 cents, in the year-ago second quarter.

Revenue generated by the Raleigh, N.C.-based open-source software company (RHAT: news, chart, profile) rose 42% for the three months ended Aug. 31 to $65.7 million, up from $46.3 million last year.

The results topped the average estimates of analysts polled by Thomson First Call, who had expected Red Hat to earn 7 cents a share on revenue of $65 million.

On a conference call to discuss the results, Chief Executive Matthew Szulik said greater corporate acceptance of Linux was driving Red Hat's growth. The company reported subscription and service revenue of $53.7 million, up from $33.9 million a year ago.

In the wake of the quarterly report, analysts at UBS and Sun Trust Robinson Humphrey raised their respective ratings on the stock to buy from neutral.

Looking ahead, Red Hat expects to report a third-quarter profit of 9 cents to 10 cents a share on revenue between $70.5 million and $71.5 million, as opposed to analysts' estimates of 8 cents a share on revenue of $69.4 million.

Red Hat also narrowed its full-year revenue forecast to between $270 million and $275 million from a range of $265 million to $275 million previously.


Rex Crum is a reporter for MarketWatch in San Francisco.








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