Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of

RALEIGH, N.C. – Shareholders in (NYSE: RHT) are having a merry, merry Christmas with lots of profits in their portfolio stockings.

With quarterly earnings to be announced today after the markets close and a profit of 16 cents per share expected by analysts, Red Hat performed strongly again on Wall Street Monday as shares hit a 52-week high of $30 before closing at $29.74.

However, just how much higher can Red Hat shares climb? Analyst Katherine Egbert, who follows red Hat for Jefferies & Company, reiterated a “hold” rating on the stock in a research note issued late Monday.

Still, what a year 2009 has been.

To start 2009, shares in the world’s top Linux open source software and services provider were less than $12.

Analysts are predicting Red Hat will increase quarterly sales to $188 million, up from $165 million a year ago. Profits are going to be less at 16 cents vs. 24 cents in the same 2008 time frame, according to CNBC.

In her note, Egbert cautioned that “recession-related weak demand” is hurting Red Hat but she says audits of customers and channel resellers is helping offset new sales.

“While [Red Hat Enterprise Linux] is open source and governed by the Gnu General Public License, the commercial contract customers sign with Red Hat allows them to apply the company-supplied updates to only one copy of the software,” Egbert wrote. “We believe management has stepped up its enforcement of these contract terms over the past few quarters, leading to better-than-expected cash flow results.

“Our recent checks indicate that these audits may be covering some weakness in demand that is probably recession-related i.e. weak server sales,” she added.

Plus, don’t forget Oracle’s acquisition of Sun, which apparently will gain European Union approval in the near future.

“Oracle’s impending purchase of Sun could also introduce some price pressure beginning in the current quarter,” Egbert wrote.

Still, what a year 2009 has been for the Hatters.

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