Red Hat: Management 'Holding the Line' on Linux Pricing and Discounts

Red Hat (RHT) is “holding the line” on pricing and discounts for Linux despite the new competition from Oracle (ORCL) and an alliance between Microsoft (MSFT) and Novell (NOVL), according to UBS analyst Heather Bellini.

In a research note yesterday, Bellini said that at a meeting with investors hosted by UBS, Red Hat CFO Charlie Peters asserted that while some customers have started to use Oracle to negotiate lower pricing, the company has held the line. Bellini writes that it will take a few quarters for Oracle to begin making an impact on the market. She says that the Microsoft/Novell alliance “has not really changed the competitive dynamics in the Linux market.”

Bellini yesterday raised her price target on the stock to $25 from $19.

Red Hat shares yesterday were up 56 cents, at $24.56.

RHT 1-yr chart