UPDATE 2-Red Hat profit up as Linux sales offset weak JBoss

Red Hat's JBoss purchase has been controversial since it was announced in April 2006, partly because it brought Red Hat into direct competition in the Web application server market with two of its biggest partners, International Business Machines Corp (IBM.N) and Oracle Corp (ORCL.O).

Several months after Red Hat bought JBoss, Oracle started offering a product similar to Red Hat Linux. While that has yet to show signs of taking share away from Red Hat, analysts say Oracle could prove a long-term threat.

Szulik says he is confident the JBoss acquisition will pay off. In each of the past four quarters, he added, JBoss has closed at least one deal worth at least $1 million.

On the conference call, Red Hat forecast third-quarter profit excluding items of 18 cents a share on revenue of $131 million to $133 million, versus average analyst estimates of 18 cents and $132.9 million, according to Reuters Estimates.

Shares of Red Hat rose to $19.83 in extended trade from a New York Stock Exchange close of $18.89.