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S&P Endorses Linux, Raising Red Hat

Jan 30, 2009, 13:33 (4 Talkback[s])
(Other stories by Jon C. Ogg)

"S&P raised the corporate credit rating on Red Hat to 'BB' from 'BB-' to reflect its consistent operating performance and improved capital structure. S&P said that the outlook is stable. Keep in mind that this is still a "junk bond" rating, but it only has to go above "BB+" up to "BBB-" to reach investment grade.

"Also noted are the relatively narrow business profile and modest operating scale, as well as rapid technology evolution. If you read into the "barriers to entry" of smaller Linux players, it almost sounds like S&P believes that it is getting a lock in the Linux space for computers. Analyst Martha Toll-Reed said, "We believe these concerns partly are offset by barriers to entry provided by the large number of independent software and hardware vendors which certify their products to work with Red Hat, as well as liquidity, balance sheet strength and cash flow that are good for the rating level."

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