Red Hat profits booming

Its always good to hear Linux doing well, it seems that Red Hat Linux is. The company yesterday announced an increase in revenues for its second quarter, with profits of $46.3 million. This is up 60 per cent from the same time last year, and is 11 per cent up from the previous quarter.

Earlier this year, Red Hat changed how it recognized revenues for some of its subscription agreements, after taking advice from its auditors, PricewaterhouseCoopers. Instead of recognizing revenue for subscription agreements on a monthly basis, revenue is now recognised on a daily basis over a particular contract's term. In addition, rather than recognizing revenue on the first day of a month, Red Hat will now recognize it on the last day. These changes have not proved popular with clients. This accounting change resulted in more than a dozen law firms looking for clients to file class-action suits against the Raleigh, N.C.-based Linux company. These new profits may help to smooth the situation over and keep investors happy.