Red Hat says it's pleased with its Q4 results despite the fact that revenues came up short and it registered a small $56,000 loss. 

Red Hat's pleased enough because the business that matters, its paid enterprise software, showed gains. 

The shortfall happened on the retail side, which came in $1 million light of projections, and the company sacrificed $900,000 to currency exchange rates.

Red Hat attributed the weak retail sales to the environment and the fact that it had cut back on promotions. It's trying to make itself independent of the sector anyway, marketing VP Mark de Visser said. The company's enterprise sector reportedly overachieved.

Red Hat came in with revenues of $25.9 million for the period ending February 28, up 7% sequentially, although it was expected to do a penny a share on $26.8 million. It broke even in Q3 and had a $42.3 million loss, 25 cents a share, a year ago.

To its credit, enterprise sales were up 80% sequentially, it said, deferred revenues were up 75% sequentially to $17.8 million and it generated $3 million in positive cash flow from operations so that its bank account now stands at $292 million, up $5.4 million year-over-year. It continues to have no long-term debt. It's working on a gross margin of 68%. Subscriptions alone were good for an 81% margin.

For the fiscal year, Red Hat lost $6.4 million, or four cents a share, on revenues up 15% to $90.9 million. In fiscal '02, it lost $140.2 million, or 83 cents a share, on $78.9 million.

Red Hat CEO Matthew Szulik claims the company, which celebrated its tenth birthday on Tuesday, has finally turned into a real business and has become "relevant" to the enterprise, realizing $45 million from operations in the last nine months. 

Red Hat got off 16,500 copies of Advanced Server, now renamed Enterprise Linux AS, in Q4, up 38% sequentially. Since starting to peddle the thing last June, Red Hat says it's sold 36,500 copies at an average price of $650/server/year. It also got off 5,000 of its Itanium Workstation in Q4 at an average price of 100 buck a box a year and now that it got a 32-bit model of the stuff it's projecting the two will go for an average price of $100-$125. 

It counts 1,500 customers, 200 of which are Global 1000s. Evidently 30% of the folks with lower-end versions of the operating systems have been trading up to the enterprise stuff.

Red Hat is projecting it will do $12.4 million-$12.7 million in the enterprise subscriptions this quarter, $9.4 million-$9.6 million in enterprise services, $3.6 million-$3.8 million in retail and $1.4 million in embedded, realizing $1.3 million-$1.5 million in earnings or a penny a share. Retail, despite the imminent arrival of Red Hat 9, is projected to be flat or down.

The company says it wants to be doing 70% of its business through indirect channels by the end of the year.