Szulik Out at Red Hat; Former Delta Exec Tapped as CEO

— -- Longtime Red Hat CEO Matthew Szulik is being replaced, the company announced on the same day it posted a quarterly revenue gain of 28 percent.

James Whitehurst, formerly the chief operating officer for Delta Airlines, will take on Szulik's leadership positions and a seat on the board starting in the new year. Szulik, currently president and CEO, will remain as chairman of the board.

Szulik had been Red Hat's CEO for the past eight years and is one of the most prominent business executives in the open-source world.

On a conference call Thursday, Szulik said he was leaving his post due to personal family health reasons. On a blog posting on Red Hat's Web site, he expressed gratitude for having been part of a company that propelled open-source software into the mainstream.

"For many years, my face has been pressed up against the windshield trying to look into the future. Learning and adapting to an evolving Red Hat community, culture and marketplace," he wrote. "I take pride when customers and industry types comment to me that the people of Red Hat are 'different.' ... Through our actions, the open source community and the people of Red Hat are defining a modern economic relationship between developer and customer."

Szulik also thanked the "people of Red Hat" for their "sacrifices, contributions and camaraderie.

Red Hat said that the board has been searching for a new CEO for a while now, which indicates that there's no ill will involved in the leadership change, said Charles King, principal analyst at analysis firm Pund-IT.

The fact that Red Hat chose an operations expert to lead the organization offers some insight into the company, King said. "Usually you bring an operations expert in if you feel that you might have the right strategy and the right people and products but you need to get the organization moving in a more functional, logically sound manner," he said.

Szulik will still likely play a key role as chairman, he said. Because Whitehurst is new to the Linux community, Red Hat will likely rely on Szulik to continue to communicate with the industry. "It's almost like a foreign policy issue, if you will, that companies need to deal with in order to deal effectively with the Linux community," King said.

Whitehurst joins Red Hat as the company works through a transition aimed at helping it compete better with giants like Oracle and Microsoft. The company is best known for its Linux server distribution, but that market is getting increasingly crowded. As a result, Red Hat is trying to reach out into other areas or beef up existing offerings, like its services.

Despite the competitive landscape, Red Hat managed to produce solid results for its third quarter ending Nov. 30. It posted revenue of $135.4 million, an increase of 28 percent over the same period last year.

Net income reached $20.3 million or $0.10 per diluted share, compared with $14.6 million or $0.07 per diluted share in the corresponding quarter of 2006.

The company highlighted its JBoss Advanced Partner Program, launched during the quarter, aimed at offering support services to value-added resources in North America. Red Hat bought JBoss last year as part of its efforts to expand its offerings.