Red Hat (NYSE: RHT)  is set to announce its latest quarterly financials on Thursday, and Wall Street won’t be surprised if the Hatters deliver better-than-expected results. Or will the Hatters disappoint?

A new deal with IBM (NYSE: IBM) may be a boost – down the road.

The Street expects Red Hat to report earnings of 40 cents per share on revenue of $451.4 million.

That revenue total is a slight bump over the $446 million reported in September for the previous quarter. Earnings would be down a penny.

However, Red Hat did beat the Street by 3 cents last quarter. And as the financial news website Zacks reports, the Hatters have “delivered positive earnings surprise of 13.3% in the last four quarters.”

Red Hat’s own estimate is around 40 cents with revenue between $449 million and $452 million. 

Analysts remain positive for the most part about Red Hat, although Wells Fargo downgraded the stock on Dec. 8.

Offsetting the Wells Fargo news, JPMorgan and Piper Jaffray launched coverage this month with “overweight” ratings.

IBM Deal

Red Hat and IBM are announcing a new deal today that’s focused on high-end IBM Power servers.

“Pairing Red Hat’s Linux operating system with IBM Power Systems will enable enterprises to achieve greater database and transactional speed, as well as lower their workload footprint,” Computer Business Review notes. 

The Register, a U.K.-based tech news site, sees Red Hat virtualization running on the Power servers, as a boost for both firms. Red Hat gains more credibility for running programs at the highest speeds and IBM makes its Power8s more productive.

Says the Register: “IBM’s new Power8 systems are beasts with cores galore and GPU acceleration on the side. Big Data applications and other heavy data crunching are the target, but even those kinds of workloads can often benefit from virtualisation’s ability to abstract hardware. And of course nobody wants their tin idling these days: un-used CPU cycles are just asking for mean glances from financial types who’ve read airline magazines about cheap cloud servers.”

Zacks Worries

But Zacks has some concerns about Red Hat.

“Red Hat’s strategy of sacrificing service revenues to increase subscription revenues over the long run is expected to hurt top-line growth in the next couple of quarters,” Zacks reported earlier this week.

“Nevertheless, Red Hat continues to gain market share and its Linux servers are well positioned to compete with Microsoft and Oracle in the enterprise market. Moreover, strong product pipeline, continuing investments to expand product portfolio and partnerships with the likes of IBM, Dell and Intel will drive further growth.”