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Press release

Red Hat, Inc. to Acquire Internet Performance Management Provider Bluecurve, Inc.

Will Expand redhat.com's Subscription-based Solutions with Web-based Performance Management Services to Help Companies Proactively Manage Internet Infrastructure

RALEIGH, N.C

Red Hat, Inc. (NASDAQ:RHAT), the leader in open source Internet infrastructure solutions, announced today that it has signed a definitive agreement to purchase privately-held Bluecurve, Inc. Under the terms of the agreement, Red Hat will issue up to 1,257,862 shares of Red Hat common stock in exchange for all of the outstanding securities of Oakland, Calif.-based Bluecurve. The transaction will be valued based on an average price of Red Hat's common shares for a five-day period ended April 24.

The acquisition will be accounted for as a purchase and is expected to be completed by July 2000, subject to approval by Bluecurve shareholders and customary closing conditions.

Bluecurve's performance management solutions allow customers to simulate and measure the transactions and user activity that place demands on Internet infrastructure and applications. The resulting performance data provides customers with the information they need to plan and scale their infrastructure proactively to assure the highest levels of customer service. Red Hat will leverage the software to create a powerful, open source, performance management service to help companies build and manage scalable Internet infrastructures. The new Web-based service will be offered as a subscription to customers through redhat.com. In the meantime, Red Hat will support existing customers and offer Bluecurve's solutions in their current form, ensuring that the acquisition does not disrupt customer access to this functionality.

"Global 2000 and Internet Service Providers (ISPs) around the globe leverage Red Hat's open source solutions as the backbone of their Internet and e-commerce infrastructure. With the addition of Bluecurve's expertise and software, Red Hat will be able to deliver a very powerful performance management solution to help today's e-businesses automatically and proactively monitor their Internet infrastructure," said Matthew Szulik, president and CEO of Red Hat. "The addition of Bluecurve continues Red Hat's initiative to provide a complete range of services to manage Linux servers"

The new Red Hat performance management service will allow enterprises to evaluate existing server, network and application performance. In addition, the service will allow customers to create simulated user activity to evaluate how the existing infrastructure and applications would handle hypothetical traffic loads.

"Today's e-businesses turn to open source software like Red Hat Linux for its unmatched reliability and flexibility for critical systems. These customers, who can't afford even a single minute of Internet downtime, will now be able to leverage redhat.com and powerful remote management services to take a proactive approach to managing Web performance," said Tom Grubb, co-founder of Bluecurve. "Red Hat and Bluecurve are redefining what it means to buy and use an Internet server OS."

Red Hat is the market leader in open source Internet infrastructure solutions, offering a wide array of consulting, training, support and certification solutions for both its award-winning open source Red Hat Linux OS and popular open source applications used by enterprises worldwide. Bluecurve is the software technology leader for solutions that measure distributed systems performance, availability and reliability from the user's perspective.

redhat.com and open source momentum

Redhat.com, the premier portal for a wide variety of open source software and information solutions, attracts the largest global audience of open source developers and users. Red Hat's subscription service, introduced with version 6.0, offers continual updates to Red Hat Linux users through an innovative, automated Internet delivery service. In February, Red Hat unveiled Wide Open News (www.wideopen.com), an editorially independent Web site for Linux and open source news and analysis. In March, redhat.com added several new services, including: "What Can Red Hat Do for Me," which delivers users a made-to-order report featuring the information, products and services right for that customer's needs, and "Success Stories," which details the business need, deployment and cost savings of Red Hat Linux for Internet Infrastructure solutions. [And yesterday, the company unveiled the redhat.com Marketplace, a perfect starting point for accurate, up-to-date information and purchasing options for Internet infrastructure solutions that are based on or support Red Hat Linux and other open source technologies.

International Data Corp. (IDC) research states that paid Linux shipments grew faster than any other server operating system over the past two years. IDC preliminary figures for 1999 show Linux shipments hold 24.6 percent of the server operating system market, up from 15.8 in 1998.

IDC research also show 40 percent of all spending on Linux servers is for Internet-related applications, making Linux servers firmly embedded in the Internet infrastructure. Research firm NetCraft, Inc. (www.netcraft.com), states that 29 percent of all public Web servers also run on Linux, making Linux the most popular operating system for public Web sites.

About Red Hat, Inc.

Red Hat, the world's leading open source and Linux provider, is headquartered in Raleigh, NC with satellite offices spanning the globe. Red Hat is leading Linux and open source solutions into the mainstream by making high quality, low cost technology accessible. Red Hat provides operating system software along with middleware, applications and management solutions. Red Hat also offers support, training and consulting services to its customers worldwide and through top-tier partnerships. Red Hat's open source strategy offers customers a long term plan for building infrastructures that are based on and leverage open source technologies with focus on security and ease of management. Learn more: http://www.redhat.com

Forward-Looking Statements

Forward-looking statements in this press release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release that are not strictly historical statements, including, without limitation, management's plans and objectives for future operations, and management's assessment of market factors, constitute forward-looking statements which involve risks and uncertainties. These risks and uncertainties include, without limitation, reliance upon strategic relationships, management of growth, the possibility of undetected software errors, the risks of economic downturns generally, and in Red Hat's industry specifically, the risks associated with competition and competitive pricing pressures, the viability of the Internet, and other risks detailed in Red Hat's filings with the Securities and Exchange Commission, copies of which may be accessed through the SEC's Web site at http://www.sec.gov.

LINUX is a trademark of Linus Torvalds. RED HAT is a registered trademark of Red Hat, Inc. All other names and trademarks are the property of their respective owners.

About Red Hat

Red Hat is the world’s leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As the connective hub in a global network of enterprises, partners, and open source communities, Red Hat helps create relevant, innovative technologies that liberate resources for growth and prepare customers for the future of IT. Learn more at http://www.redhat.com.

Forward-looking statements

Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: risks related to delays or reductions in information technology spending; the effects of industry consolidation; the ability of the Company to compete effectively; the integration of acquisitions and the ability to market successfully acquired technologies and products; uncertainty and adverse results in litigation and related settlements; the inability to adequately protect Company intellectual property and the potential for infringement or breach of license claims of or relating to third party intellectual property; the ability to deliver and stimulate demand for new products and technological innovations on a timely basis; risks related to data and information security vulnerabilities; ineffective management of, and control over, the Company’s growth and international operations; fluctuations in exchange rates; and changes in and a dependence on key personnel, as well as other factors contained in our most recent Quarterly Report on Form 10-Q (copies of which may be accessed through the Securities and Exchange Commission’s website at http://www.sec.gov), including those found therein under the captions "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations". In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic and political conditions, governmental and public policy changes and the impact of natural disasters such as earthquakes and floods. The forward-looking statements included in this press release represent the Company’s views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.