OStatic

In a swimmingly good day for the stock market yesterday, shares in Red Hat rose a whopping 10 percent, on speculation that Oracle may buy the company. The flight of fancy began with comments from Jeffries & Co. analyst Katherine Egbert, covered by Barron's. Reuters picked up on the rumor, but Steven J. Vaughan-Nichols is having none of it, and Matt Asay points out that this exact rumor is seasonal. I doubt if Oracle is after Red Hat, but I'm not as sure as Vaughan-Nichols that an acquisition wouldn't make sense for Oracle.

Savio Rodrigues is out with a very interesting post on Red Hat's financial consistency. Long story short, he concludes that over the past two years a whopping 48 percent of Red Hat's income before taxes is classified as Other Income. Specifically, this refers to interest income the company generates and capital gains on investments, and it's clear that the mix between this type of income and earnings generated from the company's core software business are about evenly matched. Is this good or bad?