Red Hat Inc. (RHT)

All Comments on RHT

  • commenter
    Dennis Byron
    Sep 05 05:23 PM
    My Website
    Red Hat's Latest Acquisition Brings Multiples Back to Earth [view article]
    Cameron

    Thanks for the comment. As Sacha describes above, the idea is to try to figure out what the acquired company did or will do the year after it was acquired. As the blog post notes, lining up the years will never be perfect.

    We will never know on JBoss but Red Hat SEC filings indicate its revenue actually declined after it was acquired. As for Qumrannet, the 5X is simply based on the Red Hat press release of September 4, 2008 announcing the deal.

    Bigger point: the trend line has gone from unbelievably high to a more normal multiple traditionally assoicated with any young hot software company.

    -- Dennis     Reply
  • commenter
    cameronm
    Sep 05 04:14 PM
    Red Hat's Latest Acquisition Brings Multiples Back to Earth [view article]
    I think the JBoss multiple was far lower. I think it was more like 20. I think the Qumranet multiple is a lot higher than 5. Reply
  • commenter
    Dennis Byron
    Sep 05 09:37 AM
    My Website
    Red Hat's Latest Acquisition Brings Multiples Back to Earth [view article]
    User 255819 -

    I say there is no such thing as an open source company because open source is a culture and a set of license terms and conditions, neither of which can be used to define a "company," especially one you would want to invest in (which is the point of SA after all).

    Every so-called open source company I have looked at (as opposed to a group such as the Apache Software Foundation or the Mozilla Foundation) looks just like every other software business I have ever looked at; it just recognizes its revenue slightly differently (as explained by Sacha in the other comment above). I say slightly differently because even most of the so-called non-open-source software companies (e.g., SAP, Oracle, etc.) recognize most of their "software revenue" as subscriptions in the same way Red Hat does.

    Sacha -

    I understand your logic but I'm still a Jerry McGuire guy. When I said "we are not able to compare revenue-per-year totally fairly in all these acquisitions because the acquired companies were all private," I could have also added the disclaimer--that I use in my reports--that a total subscription-based revenue model understates market share. But I didn't think it mattered for this analysis because all the companies acquired kept their books this way, no?

    So--if I used your method--the multiples are still going down dramatically, just from different highs.

    (As for source, I'll send you an email.)     Reply
  • commenter
    Sacha
    Labourey
    Sep 04 02:38 PM
    My Website
    Red Hat's Latest Acquisition Brings Multiples Back to Earth [view article]
    Hello Dennys,

    I enjoy reading your posts.

    Still, I am not sure where you got some of your numbers...

    Anyway, only looking at revenues for valuating a subscription-based business in a high growth period makes very little sense, that's why those acquisitions are usually based on bookings (single year bookings preferably), not revenues.

    Reasoning? If such a subscription-based company would have no-growth at all during the next 12 months, their SY-bookings would be equal to their revenue. BUT, if such a company would have a high growth Y-to-Y (like 100%), revenue would be much lower than their SY-bookings - which is the case for most of the companies you list in your article.

    This is a cash-flow business model - unlike some software vendors with a strong percentage of license-based bookings - mostly recognized as revenue upfront, not over-time.

    This "trailing" effect of revenue vs. bookings is something subscription-based companies constantly have to re-explain to the street, used to deal with more traditional license-based software vendors.

    But I guess you already knew all that :)

    Cheers,

    Sacha Labourey

    Disclaimer: while I work for RHT, the posting above is my own and don’t necessarily represent RHT’s positions, strategies or opinions.     Reply
  • commenter
    User 255819
    Sep 04 02:30 PM
    Red Hat's Latest Acquisition Brings Multiples Back to Earth [view article]
    How do you figure there's no such thing as an Open Source company? I can think of a bunch of them, many of which you yourself mentioned. Reply
  • commenter
    Elliot
    Miller
    Sep 04 12:59 PM
    Not Off the RIMM - Cramer's Lightning Round (9/3/08) [view article]
    Frontline is entirely on the spot market and in tankers for crude and refined products.Eagle is in dry bulk (limited to the Supramax sub-sector, has credit insurance on its charterers and 3-5 year time charters--with one ship on a 10 year charter--has an entirely different business model than Frontline). These are not at all comparable risk models, so Cramer's comment is irrational. Reply
  • commenter
    boubou
    Sep 04 12:23 PM
    Not Off the RIMM - Cramer's Lightning Round (9/3/08) [view article]
    When the likes of Cramer finally get into an underrated sector like shipping, then the party is usually over.
    His 50% accuracy could easily be aachieved by a cave man.
    Lately he's been saying 'don't follw my recs. - do your own homework -an hour per stock followed'.
    What!?!!?
    My hour is now better than his full-time passionate pursuit of perfection??

    FRO for example has been despised by analysts for ten years, during which time it has payed excellent dividends along with some useful growth. You can also trade the rather predictable ups and downs.     Reply
  • commenter
    User 218405
    Sep 04 11:40 AM
    Not Off the RIMM - Cramer's Lightning Round (9/3/08) [view article]
    Cramer said to sell MGM and the casino stocks. What an idiot. He has been wrong on his picks over 50% of the time. That's why he makes money writing these articles and not making money as an investor. I like Zack's picks. They do a pretty good job on their recommendatios.
    Daniel Kowkabany     Reply
  • commenter
    dubious
    Sep 04 08:44 AM
    Not Off the RIMM - Cramer's Lightning Round (9/3/08) [view article]
    Cramer does not know the Shipping Sector. Neither do show hosts on CNBC. I heard one confuse bulk shipping with containers coming out of China. Either the sector is too small, or they don't have contacts to interview, or they don't have access to shipping analysts in New York. I sometimes wonder what other sectors are great investments but we don't hear about them because Cramer and his cohorts don't follow them. Reply
  • commenter
    User 9914
    Sep 03 08:40 PM
    Not Off the RIMM - Cramer's Lightning Round (9/3/08) [view article]
    2-3 DAYS AGO CRAMER SAID SELL CVS BUY WAG NOW HE IS RECOMMENDING CVS HE IS A SICK PUPPY Reply
  • commenter
    mrbill for V
    Aug 19 12:35 PM
    Hedge Fund Tracking: Tremblant Capital [view article]
    ALERT: USER 172125 is V WINNER Reply
  • commenter
    Daniel
    Jacome
    Aug 18 01:33 AM
    My Website
    Hedge Fund Tracking: Tremblant Capital [view article]
    keep up the good work Reply
  • commenter
    User 172125
    Aug 17 04:52 PM
    Hedge Fund Tracking: Tremblant Capital [view article]
    dfjldjfl Reply
  • commenter
    marketfolly
    Aug 15 10:09 AM
    My Website
    Hedge Fund Tracking: Tremblant Capital [view article]
    edward lord clarendon.

    hedge fund 13f filings with the SEC only report LONG holdings. so if they added, they added to their long. if they reduced, they sold off some of their long. they are not required to report short positions.

    kind of common knowledge regardless though, that when funds in general talk about "holdings" they are referring to their longs.     Reply
  • commenter
    T B
    Aug 15 08:35 AM
    Hedge Fund Tracking: Tremblant Capital [view article]
    Having only discovered your site recently I must say I am more impressed with each new article such as Hedge Funds portfolio activity. Also noticing Tremblant's portfolio added to anad position tells me they feel as bullish as I on them but expect perhaps a sprd investment soon at these prices for an obvious solid long term play. Reply
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