S&P rates Red Hat

Standard & Poor's said it assigned its B corporate credit and senior unsecured ratings to Red Hat Inc.

S&P said the ratings reflect very high leverage, rapid growth, Red Hat's narrow product offering in the early stages of adoption, low barriers to entry, and a rapid technology evolution. These concerns partially are offset by adequate liquidity and positive cash flow, as well as a good number of software applications written for Red Hat's operating systems.

In addition, Red Hat benefits from the company's growing, although not exclusive, partnerships with large computer hardware original equipment manufacturers.

The outlook is stable.

The company's cash balances - $964 million as of May 2004 - are adequate to fund acquisitions and other investment spending. Red Hat's $600 million senior unsecured convertible debentures can be put back to the company by investors in January 2009.

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