Red Hat Completes Bluecurve Acquisition

Research Triangle Park

United States, May 26, 2000

Red Hat Adds Bluecurve's Server Performance Management Solution to Its Subscription-Based Range of Services

Red Hat, Inc. (Nasdaq: RHAT), the leader in open source Internet infrastructure solutions, completed the acquisition of privately-held Bluecurve, Inc. in a transaction valued at $33.9 million in which Red Hat issued 1,257,862 shares for all outstanding securities of Bluecurve. The value of the transaction was based on an average closing price of Red Hat's common shares for a five-day period ended April 24. The acquisition has been accounted for as a purchase.

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. The new Web-based service will be offered as a subscription to customers through redhat.com.

Matthew Szulik, president and chief executive officer, said, "The addition of Bluecurve is a major milestone in Red Hat's strategy to provide our customers with a complete range of services to manage Linux servers. With our performance management solution, e-businesses can remotely and proactively test their Linux servers, enabling them to manage more traffic without downtime. We are on track to deliver remote management services before the end of August 2000 to Internet Service Providers and Global 2000 companies around the world through redhat.com."

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 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 that are 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. In May, 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

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