Red Hat CFO is upbeat

The chief financial officer of Red Hat reminded investors this week that the company's Linux software appeals to corporate and government customers during both good times and bad.

Speaking Monday at an investment forum in Vail, Colo., sponsored by investment bank Pacific Crest, Peters noted that the government sector -- federal, state and local governments -- has been the Raleigh-based company's largest customer group over the past nine months.

"I think the reason for that is that they are all having such budget difficulties," Peters said. "There is a very compelling value proposition for Red Hat software and our support and we can help them save money. That is why I think we performed extremely well during the depths of the recession."

"Growth has accelerated coming out of the recession," he added.

Last fiscal year the company's sales expanded 22 percent to $909.3 million. This fiscal year the company expects sales to blow past the $1 billion mark.

Red Hat's Linux software is free, but its corporate customers pay for maintenance and support. The bottom line is that Red Hat's offerings are much cheaper than competing products from Microsoft and others.

Red Hat changes its marketing approach "ever so slightly" depending on the economic climate, Peters said.

When times are good, the company stresses the value of its software. In a down cycle, it talks about the cost savings, a message that resonates with customers whose budgets have been slashed.

"It's pretty close to the same message, but it is a nuance," Peters said.

Red Hat, which already has sales offices in more than 30 countries, plans to open new offices in Chile, Denmark, New Zealand and Russia this year.

Although customers in those countries can get Red Hat software through distributors, "the mere presence of an office and a direct sales force" has spurred sales growth in other countries, Peters said.