June 24, 2009 / 8:35 PM / 10 years ago

UPDATE 1-Red Hat profit rises, bucks tech industry trend

* Q1 EPS excl items 15 cents vs Street view 14 cents

* Q1 revenue $174 million vs Street view $172 million

* Subscription sales model helps boost profits

* Shares rise 1.8 percent in extended trading

BOSTON, June 24 (Reuters) - Software company Red Hat Inc RHT.N reported a modest jump in quarterly profit, bucking an industry trend of declining earnings, thanks to a reliable business model through which it books sales over multiple years.

Its shares rose 1.8 percent in extended trading on Wednesday as its profit, excluding items, and revenue beat Wall Street projections.

First-quarter net income rose to $18.5 million, or 10 cents per share, from $17.3 million, or 8 cents, a year earlier.

The company, whose rivals include Novell Inc NOVL.O and Microsoft Corp (MSFT.O), sells upgrades, help-desk support and bug fixes for Linux software. It has weathered the recession better than computer makers and many software companies because Red Hat customers buy its service in subscriptions over the course of several years, giving it a predictable revenue stream.

Profit, excluding items, of 15 cents per share, for its fiscal first quarter ended May 31, beat analysts’ average forecast of 14 cents, according to Reuters Estimates.

Revenue rose 11 percent to $174 million, versus the average forecast of $172 million.

Shares of the Raleigh, North Carolina-based company rose to $20.50 in extended trading, from their New York Stock Exchange close of $20.13. (Reporting by Jim Finkle; Editing Bernard Orr)

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