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Red Hat shares soar on strong earnings

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Red Hat shares soared today after the Raleigh software company late Wednesday reported sales and profit that beat Wall Street expectations.

The Linux distributor is benefitting as corporate and government customers seek a cheaper choice in computer-operating software. Red Hat is winning more contracts, and longer ones, suggesting that some technology spending is picking up despite the recession.

"Just look at the numbers. We're clearly taking share," CEO Jim Whitehurst told Bloomberg News. "To grow at double-digit rates in this economy is market validation that our open-source model works."

Second-quarter revenue rose 12 percent to $183.6 million. Profit climbed to 15 cents per share.

Red Hat also is getting a boost from uncertainty related to rival Sun Microsystems' pending takeover by Oracle.

Sun customers worried about the acquisition are looking for other options, Whitehurst said. "That's good for us."

Red Hat's stock jumped $3.07, or 12 percent, today to close at $27.95. The shares have more than doubled this year.

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About the blogger

Assistant Business Editor Alan M. Wolf joined the N&O in 1999 covering the business of health care. He became an editor in 2001, and helps oversee the paper's daily business coverage and Sunday Work&Money section. He lives in Clayton with his wife and two children. Reach him at 919-829-4572 or e-mail him.