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Increased Clientele for Red Hat

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A leading provider of open source solutions, Red Hat Inc. (RHT - Free Report) continues to support organizations with a varied business demand in the Information Technology (IT) infrastructure. IT based organizations are aggressively adopting Red Hat’s open solutions and Virtualization technology to grow their businesses.
 
Ganart Technology
 
Texas based Ganart Technology is using a combination of Red Hat Enterprise Linux and Red Hat Enterprise Virtualization software to operate its financial transaction cloud data center.
 
Ganart aims to achieve scalability and flexibility for its datacenter by developing a successful cloud technology that provides end-to-end financial services to its clients at a lower cost with superior performance and charges customers only for the service they have consumed.
 
Originally built on Red Hat Enterprise Linux operating system, Ganart upgraded its datacenter by adopting virtualization technology from Red Hat primarily due its cost effectiveness. By using Red Hat solutions, Ganart achieved 60% of cost savings.
 
The combination of Red Hat Enterprise Virtualization and Red Hat Enterprise Linux will help Ganart achieve significant business growth.
 
Policlinico San Marco
 
Italy-based health service provider, Policlinico San Marco is using a combination of Red Hat Enterprise Virtualization and Red Hat Enterprise Linux to run its mission critical infrastructure including email, instant messaging, IP telephony and Oracle Corp’s (ORCL - Free Report) databases, as well as high-end medical applications such as the management system for radiology.
 
Policlinico San Marco shifted from Citrix XenServer on Microsoft Corp. (MSFT - Free Report) Windows to the Red Hat combination on Dell Inc. (DELL - Free Report) servers in order to achieve an improved performance, security and scalability. The company selected Red Hat solutions to focus on their core business
 
Growing Opportunity
 
Growing Opportunity, an India based micro finance organization has deployed Red Hat’s mission-critical applications, including its portfolio management application and mail server, on Red Hat Enterprise Virtualization and Red Hat Enterprise Linux to expand its customer base.
 
The company selected Red Hat after a careful evaluation of several virtualization solutions that included Microsoft’s (MSFT - Free Report) Hyper-V and VMware Inc.’s (VMW - Free Report) vSphere. This has ensured up to 50% cost savings for the company thereby enabling it to achieve an enhanced performance and scalability for its systems.
 
Euronet Service India Pvt. Limited
 
Similarly, Euronet Service India Pvt. Ltd., a provider of electronic payment and transaction processing solutions shifted its IT infrastructure from Microsoft Windows to the combined Red Hat Enterprise Virtualization and Red Hat Enterprise Linux, thereby achieving increased profitability.
 
We believe Red Hat continues to build its customer base in emerging economies such as India, which will drive future growth.
 
Recommendation
 
We believe Red Hat is well positioned to gain significant market share from its competitors due to its cost effective open source solutions and expertise in Virtualization technology.
 
Strong execution, huge backlog and continued investments in growth areas are expected to drive Red Hat’s results in 2011. However, foreign currency volatility, primarily due to persisting downturn in Europe and increasing compensation cost may hurt earnings growth in the near term.
 
Red Hat faces stiff competition from Microsoft, Oracle and Novell Inc. .
 
We maintain a neutral recommendation on a long-term basis (6-12 months). Currently, Red Hat has a Zacks #3 Rank, which implies a Hold rating.

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