Red Hat restates earnings [oopsie!]

Red Hat announced Tuesday it is restating earnings going back to 2002, as the company changes the way it accounts for subscription revenue.

The Linux company, which recently reported the resignation of its chief financial officer, said it made the decision to change its revenue recognition after discussions last month with its independent auditors, PricewaterhouseCoopers.

This isnt' that big a deal.

Red Hat, which announced its first quarter results last month, now expects to revise its revenue to a range of $41.2 million to $41.7 million. The company had previously reported first quarter revenue of $41.6 million.

The company's first quarter net income, meanwhile, is expected to range between $10.3 million and $10.7 million. Previously, the company announced first quarter net income of $10.7 million.

For fiscal 2004, the company expects to restate its revenue somewhere between $123.8 million and $124.8 million, compared with its previously reported $126.1 million. Red Hat is also lowering its net income to a range of $13.2 million to $13.7 million. The company previously announced its net income would reach $14 million.

Red Hat also expects to lower its fiscal 2003 revenue to around $89.7 million to $90.3 million, compared with its previously announced $90.9 million. And the company's net loss for the year is now expected to be in the range of $6.9 million to $7.2 million, compared to the previously stated loss of $6.6 million.

I've learned never argue with the trend. And, this trend is going down! The market is never wrong.

Just take a look at the P/E. It's always been a spec stock and some people won big and some lost even bigger.

The supposed prime example of open source commercial viability looks like nothing but a house of cards. The SEC investigation will hopefully be deep, as it should be of anyone pushing a new "service only" model for the US software industry, while possibly cooking their books in the back room.

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