Jim Cramer spoke with Red Hat CEO Jim Whitehurst about growth at his rapidly developing software company.<\/b>
\nAs major U. S. telecommunications providers get ready to launch their 5G networks, Red Hat CEO Jim Whitehurst said his company is poised to be a major benefactor of the shift.
\u00ab\u00a0All the major telcos are going to a technology called OpenStack, and we’re the largest provider of OpenStack, we’re the largest contributor to that whole set of technologies, so we expect it could be quite large for us, \u00a0\u00bb Whitehurst told \u00a0\u00bb Mad Money \u00a0\u00bb host Jim Cramer on Wednesday. \u00ab\u00a0In fact, three of the four large telcos in the U. S. already have eight-figure relationships with us in place, and those are really just scratching the surface with very small implementations.\u00a0\u00bb
Despite the tens of millions of dollars those providers are paying to Red Hat, Whitehurst downplayed the 5G transformation in the company’s post-earnings conference call.
The CEO said he wanted to mute expectations because the 5G space is a new market for his open-sourced software giant.
Watch the full segment here:
\u00ab\u00a0At this point I want to be guarded because we’re in early days, but it could be a very, very large business, on par with our enterprise business over the next five years, \u00a0\u00bb he told Cramer.
If realized, that trajectory could mean multi-year, double-digit revenue growth for Red Hat, which reported a strong earnings beat on Tuesday.
\u00ab\u00a0It’s still early days, but the market opportunity’s there. And our business model, with a stable, long-life support, fits really, really well with telco infrastructure which, once it goes in place, it’s going to stay there for a decade, \u00a0\u00bb Whitehurst told Cramer. \u00ab\u00a0It’s a perfect market for our business model. Now we have to execute into it.\u00a0\u00bb
And as the company continues to execute on a number of functions, particularly helping its clients shift their operations to the cloud, Whitehurst said that Red Hat’s deals with government agencies are also burgeoning.
\u00ab\u00a0We had a really nice last couple of quarters with the government. We’ve always had a large business in defense and intelligence because of the security and performance of our products, and that’s now spilling over in a very significant way to the civilian agencies, \u00a0\u00bb the CEO said.
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