«At least nine law firms have announced legal actions on behalf of Red Hat investors in the wake of the Linux seller's restatement of three years of financial results.
Red Hat Chief Executive Matthew Szulik and Chief Financial Officer Kevin Thompson "intended to...deceive the investing public regarding Red Hat's business, operations, management, and the intrinsic value of Red Hat's publicly traded securities and enabled defendants to sell 1.9 million shares of their stock for proceeds exceeding $35.6 million," according to one suit, brought by Lerach Coughlin Stoia & Robbins in U.S. District Court in North Carolina. That and at least two other suits allege violations of the Securities Exchange Act of 1934.
Following a June 16 recommendation from its auditor, PricewaterhouseCoopers, Red Hat on Tuesday announced a new method for recording revenue from sales of its annual subscriptions to Linux support, its primary money source. Previously, it recorded one-twelfth of an annual subscription each month regardless of when the subscription was sold; afterward it began booking revenue only on the day it was sold.
The result is that although the company received the same amount of revenue, it received much of it a few days or weeks later. The change meant that Red Hat had net income of 7 cents per share for fiscal 2004 instead of 8 cents, and in one quarter, ended Nov. 30, 2002, had a net loss of more than $440,000 instead of net income of $214,000. »
Mmm... Perhaps Red Hat can find another product besides RHN to peddle. Wait! What if Red Hat had a low-end linux distro that it sold directly to customers? They could call it "Red Hat Linux 10" or something. That would rock!