Sep. 24--RALEIGH -- Red Hat, the homegrown Triangle technology company, reported another strong quarter Wednesday, meeting analyst expectations and beating last year's performance.

The 16-year-old Raleigh company continues humming along as one of the few local success stories during a global recession that has pummeled every sector of the economy, particularly technology, manufacturing, automotive and finance.

"Red Hat is currently one of the fastest-growing technology companies in the industry," said analyst Steven Ashley of Robert W. Baird & Co. in Milwaukee. "They're among a select group that's held up out of hundreds and hundreds of companies."

Red Hat reported that second-quarter sales were up 12 percent, to $184 million. Strong sales boosted income to 15 cents a share, compared with 10 cents a share in the same three-month period a year earlier.

Red Hat is the world's biggest supplier of services and support for Linux software programs. The open-source software is considered a cheaper alternative to Microsoft Windows and other proprietary software.

"They gain share in downturns," said analyst Katherine Egbert of Jefferies & Co. in San Francisco. "People want to diversify their vendors."

Analysts said Red Hat is benefiting from an acquisition bid against competitor Sun Microsystems, which creates uncertainty about Sun products and leads to customer defections.

Red Hat controls about 70 percent of its market. In the second quarter, the average length of signed contracts increased to 22 months, after dropping to 19 months in the first quarter, said Red Hat's chief financial officer, Charlie Peters. Sales increased 11 percent in the previous quarter.

Peters said the main challenges facing the company are associated with expansion, such as hiring and training employees.

The company has added about 500 employees in the past year and now employs more than 3,100 worldwide, including 632 full-time workers in Raleigh.

Red Hat customers include GEICO, Verizon, DreamWorks, Gap, the Federal Aviation Administration and the U.S. Army, Navy and Air Force.

john.murawski@ newsobserver.com or 919-829-8932

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