Red Hat Defies Market Pressures, Jumps 32%

The first trading week of December was started with the official proclamation that the U.S. is in a recession—and has been for a year—and ended with the worst unemployment report in 27 years.

While the overall market ended up for the week, trading remains chaotic as publicly traded companies find themselves caught in the center of bargain hunters that drive up the market and institutional investors that lack confidence in future corporate performance.

Despite these pressures, the technology sector fared relatively well. The collective publicly traded vendor and solution provider stocks tracked by Channel Insider closed down 2.6 percent for the week. The shining stars included:

·         Red Hat (NYSE: RHT), the week’s biggest winner, gained 32 percent after the stock was upgraded to a buy.  Analysts cited Red Hat’s 100 percent recurring revenue stream which they indicated will allow the company to outperform the competition through 2009

·         VMware (NYSE: VMW) recorded a 20 percent gain after several punishing weeks of trading; virtualization software remains one of the more recession-proof technologies

·         PCMall (NASDAQ: MALL) and Insight (NASDAQ: NSIT), the direct market resellers, posted gains, perhaps reflecting business-technology consumers shopping for low-prices equipment

·         OfficeMax (NYSE: OMX), Office Depot (NYSE: ODP) and Staples (NASDAQ: SPLS), office supply retailers that also sport business IT sales division, posted gains of 6 percent and better

The biggest loser of the week was Novell (NASDAQ: NOVL) with a loss of 11 percent.  Novell reported a fourth quarter loss of 5 cents per share.  Net revenue losses were $16 million versus $18 million for the same quarter last year. 

Other technology news affecting stock prices:

• Hewlett-Packard Co. (NYSE: HPQ) announced the retirement of Ron Rittenmeyer, the chief executive of EDS, on Friday.  HP acquired EDS earlier this year for $12.6 billion.  Rittenmeyer is expected to depart at the end of this month.  HP also announced that EDS, which has been a stand-alone unit, will be moved inside its technology solutions group, and named Joe Eazor to lead the EDS business operations. Eazor has been responsible for leading the EDS deal team through the acquisition and integration.   HP closed the week down 5 percent.  
• Arrow Electronics (NYSE: ARW) had its stock downgraded by Fitch Ratings service on declining organic revenue growth rates since 2006, according to AP.  In addition, Arrow has announced that 1 percent of the 13,200 employees had been laid off worldwide.  Arrow closed up 5.2 percent.
• Sun Microsystems (NASDAQ: JAVA) announced JavaFX 1.0.  Sun’s Jonathan Schwartz, chief executive officer and president shared “Sun's newest JavaFX platform unifies Java technology across billions of devices, with an easy to use, open-source platform now enabled with high quality video and audio, targeting consumers and content owners across the world—and across the Internet.”  Investors and analyst agreed sending Sun’s stock up 10 percent.