The Hatters from Red Hat are having a party to celebrate the reaching of a big benchmark for the Raleigh-based company last week.

$1 billion in annual revenue.

The private gathering at the Raleigh Convention Center on Wednesday afternoon is one way that Red Hat management is thanking employees for helping the global Linux software leader become the first Linux firm to hit that revenue total. Other parties will take place around the world, each geared to the culture of that operation, with Chief Executive Officer Jim Whitehurst going on the road from Europe to Singapore to say “well done.”

“It’s a fun but casual chance to get everyone together and celebrate,” Whitehurst said. “It’s also a good reflection of what our people are like – authentic and down-to-earth. It’s not a black tie thing.”

Not that tuxedos and gowns wouldn’t be warranted, given Red Hat’s run of success.

But as the Hatters celebrate in their trademark red fedoras, don’t think for a moment that Whiehurst is letting down his guard.

Whitehurst has just lead Red Hat (NYSE: RHT) to more than $1 billion in annual revenues with quarterly financial performances that are exceeding Wall Street analysts’ expectations.

It’s almost become a cliché to say Red Hat is red hot – but it’s fact. With shares trading up more than 45 percent so far this year (only Salesforce.com, a Red Hat customer has done better) at $60 and at the highest prices in a decade, the Raleigh-based company is projecting even more growth this year.

In fact, Whitehurst says the company plans to improve its Raleigh headcount by 150 jobs – or 20 percent from the current 750 – over the next year as the company moves into its new headquarters in downtown Raleigh.

As the Progress Energy tower becomes RHT – or Red Hat Tower – Whitehurst is focused more than just an office on the 17th floor downtown rather than on N.C. State’s Centennial Campus.

Keep Stock Price High

He has challenges – such as growing the business and pre-emptively turning away any potential buyer.

So what’s to keep another company – say an IBM or HP or Oracle or Dell – from sweeping in to take over Red Hat as more and more businesses worldwide embrace Linux software, the kernel on which the company is built and has become the global leader? No other Linux firm has reached $1 billion in annual revenues, and only a handful of firms have done so.

“The blunt answer is, there is nothing we can do directly, right?” Whitehurst said rhetorically in an interview with WRAL Tech Wire on Wednesday. “Once you are a public company, you are public.

“I tell my team every day that we want to control our own destiny, and to do so we have to fulfill our mission every single quarter.

“We have to keep our market capitalization high. Right now it’s $11 billion. Put a premium on that and the price is $15 billion, $16 billion. That’s more than half the market capitalization of Dell.

“I care a lot about our market value so we can control our own destiny. Our continued success makes us an expensive buy.”

IBM is among Red Hat’s many partners, but Red Hat has no shortage of big enemies.

Microsoft, the proprietary software king, has been among the enemies of Red Hat as well as Linux dating back to the creation of the open source (i.e. developed and expanded by programmers around the world) 20 years ago. Oracle, meanwhile, has feuded with Red Hat as well with Matthew Szulik, Whitehurst’s predecessor and former company chairman who is now retired, often traded barbs with Oracle leader Larry Ellison.

But to buy Red Hat now would cost a rival nearly half again what it would have cost back in January.

Most Wall Street analysts who follow Red Hat rate the stock as a “strong buy” or “buy” with a high-side valuation target at $68 per share.

Meanwhile, Whitehurst has become somewhat of a TV business news celebrity. CNBC’s Jim Cramer has hosted Whitehurst several times for his “Mad Money” program, once even donning a red fedora himself.

“Truly, Truly, Truly a Brand”

In addition to what it would cost, Whitehurst will lack value in some buyers’ calculations since “we don’t own any intellectual property” such as patents since Red Hat is open source. The lack of “IP” would make Red Hat a more difficult acquisition to justify, he said. Huge deals of late for bankrupt Nortel and IP and the big price Google is paying for Motorola Mobility reflect the patents.

What Red Hat has is its people who have developed such products as Red Hat Enterprise Linux, which is used by numerous investment banks ant the New York Stock Exchange. Red Hat’s swelling revenues come from subscription service to maintain, support and continuously update such products.

“We have nothing but our people,” Whitehurst said. “We truly, truly, truly are a brand and phenomenal people.”

Those people are among the reasons why Whitehurst, who lives with his wife and family in Durham, is extremely happy in his job and has no plans to leave.

“I’m having a fantastic time,” Whitehurst said. “This is one of the greatest jobs out there.

“We as a company feel that we are really doing good for society by changing the whole business model. It’s a great team with great people. It’s an incredible company.”

“Remember, I came from a much larger company, Delta Airlines. I don’t look at company size as a criteria.

“I wake up every day just amazed that somebody lets me run this place. I can’t imagine a better thing to do.”

Looking Ahead

In the coming year, Red Hat will look to grow internally and externally, adding employees in Raleigh, at its engineering headquarters in Massachusetts and elsewhere, Whitehurst said.

He also said Red Hat will continue to make acquisitions at the rate of “one or two” a year.

Whitehurst is determined that the company must find ways to continue to “scale up” in order to meeting growing business opportunities for Linux and “cloud computing.” Through the sharing of computing resources across data centers and multitasking of servers with virtualization technology that enables rival operating systems to operate on the same machine, this advance in technology is creating a “paradigm shift” in computing.

Beyond finance, Whitehurst sees big opportunities in telecommunications and in banks that aren’t on the scale of Wall Street investment players.

As the paradigm shift gains momentum, Whitehurst said he believes there will only be “one or two” winners just as IBM won the mainframe revolution and Microsoft and Intel emerged as the champions in client-server software and chips

In the “cloud” revolution, declared Whitehurst: “We are very well positioned to be the winner in software.”

[RED HAT ARCHIVE: Check out a decade of Red Hat stories as reported in WRAL Tech Wire by clicking here.]