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Red Hat Software Businesses

Red Hat Is Now Part of the S&P 500 128

Posted by Soulskill
from the stock-build dept.
phantomfive writes "Red Hat has made it onto the S&P 500, an important measure of the stock market. It is replacing CIT, which is expected to go bankrupt after the government refused to bail them out. Red Hat is the first Linux company to make it on to the S&P 500. While this means little directly for the company, it is an indication of the importance Linux is taking on in the world."
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Red Hat Is Now Part of the S&P 500

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  • by jedidiah (1196) on Saturday July 18, 2009 @11:44AM (#28741171) Homepage

    How else do you expect it to happen? Really?

    Yes. It just KILLS some people that Linux might be doing well or
    Redhat might be doing well. They will go so far as to even try to
    stir up some sort of artificial stock panic.

    Regardless of how some lemming might want to spin it, Redhat was
    slightly less important last week when compared to this week and
    this week they are a part of the S&P 500.

    Perhaps Redhat will be a little less subseptable to FUD now.

  • Re:Index funds (Score:4, Insightful)

    by Meshach (578918) on Saturday July 18, 2009 @12:09PM (#28741345)

    Owning Red Hat stock doesn't make linux happen. When you (or the index fund) buys RHAT stock, that money goes to the previous shareholder, NOT Red Hat.

    Not directly. But as more people buy stock in RHAT it means that Red Hat will be a more viable business and more people will put money into it. So indirectly Red Hat does get money.

  • by viralMeme (1461143) on Saturday July 18, 2009 @12:22PM (#28741435)
    "Red Hat .. bully customers just as well as other non-Linux open source companies, so good for them"

    Where, how, please provided verifiable citations.
  • by seifried (12921) on Saturday July 18, 2009 @12:37PM (#28741523) Homepage
    A lot of mutual funds/index funds/etc. will now be buying and holding Red Hat stock, as well as other large institutional investors (i.e. large state pension funds/etc.). Same mentality as "no one ever got fired for buying IBM computers", it's not like fund managers are much good at this (witness the melt down in almost every mutual fund/hedge fund), most of them just follow the herd.
  • by bert.cl (787057) on Saturday July 18, 2009 @12:46PM (#28741597)

    Well, my theory is a bit rusty, but wouldn't this add some liquidity for the Redhat stock?

    Might as well decrease as well if passively managed funds want to keep on to the shares, but going by gut feeling, I would think it's a good thing regardless. If anything, the share should be more correctly priced in the long run;

    Depending on your definition of correct pricing of course.

  • Re:Not surprising (Score:3, Insightful)

    by iggymanz (596061) on Saturday July 18, 2009 @01:06PM (#28741741)

    funny, my clients love Red Hat, most of them transitioned from Sun and it wasn't Red Hat who was the bully

  • by iggymanz (596061) on Saturday July 18, 2009 @01:32PM (#28741947)

    The Obama administration is the one propping up all manner of failed business models with "bailouts".

    It isn't about Anglo-American culture so much as the culture of the banking cartels, whose dynastic families have a somewhat different ethnic background.....

  • Re:Index funds (Score:3, Insightful)

    by ceoyoyo (59147) on Saturday July 18, 2009 @02:30PM (#28742389)

    Red Hat issues stock. People buy that stock and the money goes to Red Hat. Since Red Hat hasn't issued any stock lately, if you pick some up you're buying it second had, but so what? You're still responsible for an investment in the company. That is, you gave Red Hat money (probably through many intermediaries) to develop their Linux distribution.

  • Re:Index funds (Score:5, Insightful)

    by tnk1 (899206) on Saturday July 18, 2009 @02:38PM (#28742449)

    Yes and no. Directly, no effect on Red Hat.

    Indirectly, Red Hat probably has a stock reserve that it maintains. Improving the price of their stock means that they can actually buy things with that stock, usually this is in the form of acquisitions. Many buyouts are done in the form of stock swaps.

    Additionally, it makes their stock more attractive to give to employees/executives because its not some fly-by-night operation any more. Not that it was before, but some people like their certifications and industry recognitions.

    In the end, it could potentially have a net positive effect on Linux, particularly if they use any advantage in a way that will help Linux, either directly or incidentally via side-effects of their corporate strategy.

    A lot of what-ifs, but in the end, its nice to put a capstone on Linux success in the business world.

  • by jmorris42 (1458) * <jmorris@[ ]u.org ['bea' in gap]> on Saturday July 18, 2009 @02:49PM (#28742525)

    > Hey, if there's THAT much blubber to cut from the US private healthcare industry, then clearly,
    > that's a massive misallocation of resources that needs to be put to better use, like investing in education.

    You misunderstand. What I'm talking about is the headwind small business is heading into. Break it down. You run a small business, here is your future. Your major source of financing just went out, payroll taxes are about to go up a minimum of 8% (play or pay provision in the health 'reform' bill) on your entry level employees... on top of the recent bump in the minimum wage and the prospect they will soon unionize. Another major hit will be coming to your bottom line when all energy sources jump. And if you manage to keep your door open your income is about to taxed at over 50% when you take this new 5+% surtax into account. And more tax increases are coming, including the return of the dreaded death tax. Meanwhile consumers (your customers) are also losing jobs, pulling back spending and generally hunkering down for a long downturn. So how many new employees will you be hiring in that environment? That is why I'm predicting unemployment will keep going up.

    For unemployment to start dropping somebody has to start hiring beyond replacement. Large business is shedding workers, small business is currently in a holding pattern and will probably start dropping people. The only sector adding jobs is government and every government job is a net drain on the economy. Hate on business all you want pal, but good luck asking a homeless guy to hire you.

    As for education, we can waste twice what we currently spend and gain nothing. Break the union and we can get improvement with current or even lower funding. Break the entire system of government schools and we can be #1 again.

  • Re:Index funds (Score:4, Insightful)

    by dfn_deux (535506) <datsun510.gmail@com> on Saturday July 18, 2009 @04:38PM (#28743253) Homepage
    Also, being included in the S&P500 means that the increase in demand created by the associated index fund inclusion will (or should in theory) increase the per share value which has the resultant effect of increasing the over all value of the company as represented as the market capitalization. Larger market caps allow for much more leverage when negotiating financing on large business deals; not only by giving a greater perceived value but also by providing for more favorable rates on direct equity exchange deals.

    P.S. I am not an economist and what I've posted above may be completely wrong... I'm working from very old memories of a 100 level econ course I took a long long long time ago.

  • by MattXBlack (1534971) on Saturday July 18, 2009 @07:59PM (#28744365)
    Don't IBM and HP make operating systems?
  • by burnin1965 (535071) on Saturday July 18, 2009 @08:55PM (#28744597) Homepage

    Conceivably someone bigger whose market Redhat represents a threat to, could seek to buy them in order to just kill their product line, and make sure Linux never has a year of the desktop. That's one of my worst fears in all this.

    Don't sweat it too much. Red Hat's product line is the Red Hat Network, not linux. Microsoft could buy up Red Hat and destroy their support business but they would simply be replaced by another support vendor, either an up start or an existing vendor, i.e. Oracle, Mandriva, Ubuntu, Novell, etc.

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