Investors have been bullish and bearish about Red Hat stock in trading Thursday after an earnings report and forecast on Wednesday obviously disappointed some investors.
Red Hat (NYSE: RHT) traded down 5.5 percent, or $3.13, at $53.37 in late-morning trading.
Just before 2 p.m., shares were down to $53.31, or off $3.19 (5.64 percent).
Red Hat closed at $53, down 6.2 percent, or $3.50.
Trading was heavy with more than 10 million shares – nearly four times the daily average – trading hands.
Shares seesawed. RHT opened down sharply at $51.13 and fell as low as $51.02, the biggest one-day drop since August of last year. Shares closed Wednesday at $56.50.
Despite the bearish turn on shares, Red Hat Chief Executive Officer Jim Whitehurst remains upbeat.
“What allows us to accelerate growth is change,” Whitehurst told The Street.com in an interview. “If the change is extreme cost pressure, then we do well. We do well in both weak environments and strong environments as long as there’s change.”
Whitehurst also sees growth coming.
“We see a very strong pipeline for us,” he told The Street. “The spending outlook for the rest of the calendar year is very strong for Red Hat. Operating cash flow grew 38 percent year-over-year, the core metrics look fantastic, and we continue to be optimistic.”
The company did give a second quarter revenue forecast that trailed the average of estimates compiled by Bloomberg.
Billings, a predictor of revenue, were $310 million in the quarter ended May 31, falling short of the $319 million average analyst estimate, said Abhey Lamba, an analyst at Mizuho Securities USA Inc. Billings increased 16 percent from a year earlier, while analysts predicted 20 percent growth on average, according to Morgan Stanley.
“My feeling is it’s related to currency and a weakening macro-economy,” said Lamba, who recommends buying the shares.
First-quarter billings also increased at a slower rate compared with the previous quarter, which posted a 31 percent increase.
Investor concerns about billings overshadowed the first- quarter earnings. Red Hat posted profit of 30 cents a share, excluding some items, exceeding the 27-cent average estimate compiled by Bloomberg. Revenue increased 19 percent to $314.7 million, the company said in a statement yesterday. Analysts anticipated $310.8 million.
Net income rose 15 percent to $37.5 million, or 19 cents a share, from $32.5 million, or 17 cents a year ago.
(Bloomberg news contributed to this report.)