Bluecurve Questions and Answers

- —

Q: Why is Red Hat Acquiring Bluecurve?
Red Hat Linux and other open source server technologies are at the heart of today's rapidly expanding Internet infrastructure. Companies are looking for a simpler, easier way to test the scalability, reliability and overall performance of those critical systems-before they affect a user's experience or a company's e-business.

Bluecurve has tremendous expertise and unique, powerful solutions for remotely measuring the performance and reliability of the distributed systems running the Internet. Red Hat will leverage this as a new, open source, services-based solution through redhat.com. It will deliver organizations a powerful remote performance management solution to help today's e-businesses automatically and proactively monitor their Internet infrastructure.

Q: How does the combination benefit customers?
According to IDC Research, 40 percent of all spending on Linux servers is for Internet-related applications. And many Internet Service Providers (ISPs) and companies leverage Red Hat's open source solutions as the backbone of their Internet infrastructure.

With the addition of Bluecurve's expertise and software, Red Hat will be able to deliver a powerful performance management service to help today's e-businesses automatically and proactively monitor their Internet infrastructure. Offered through redhat.com, the service will enable both companies' customers to more easily evaluate the performance of a wide variety of key Internet systems to identify bottlenecks and better plan for growth.

Q: What is the value and what are the financial terms of the acquisition?
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 closing price of Red Hat's common shares for a five-day period ended April 24. (Because the market is closed on Friday, April 21, this means an average of the closing prices for April 17-20 plus 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.

Q: How does this fit into the overall vision for redhat.com?
Today, Redhat.com attracts the largest global audience of open source developers and users. During the past three months Red Hat has introduced several new, key services through redhat.com that make it the number one delivery vehicle for both Red Hat software and services AND all the information needed for companies building their Internet infrastructure around open source solutions.

This includes the redhat.com Marketplace, which we unveiled yesterday (Tues. 4/18). The redhat.com Marketplace gives corporate users 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. Customers can choose from a wide range of products from top computing companies worldwide in three major categories: hardware, software and Web hosting.

Other recent additions to redhat.com include:

  • 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.
  • Wide Open News (www.wideopen.com), an editorially independent Web site for Linux and open source news and analysis (Feb.).
  • "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 (Mar.).
  • "Success Stories," which details the business need, deployment and cost savings of Red Hat Linux for Internet Infrastructure solutions (Mar.).

Q: How will the acquisition impact revenues?
The Bluecurve acquisition is expected to add a high-value, recurring revenue stream to Red Hat's suite of software and services delivered through red hat.com.

Q: Do you expect key personnel from either company to leave as a result of the acquisition?
No, we believe that key personnel support this transaction and look forward to the opportunity to build, launch and grow Red Hat's subscription-based business. In addition, new employees will become shareholders of the combined entity.

Q: Is there any significant change in the management structure of Red Hat?
No. Matthew Szulik remains president and CEO of the combined companies and there are no changes in Red Hat's board of directors.

Q: How and when will the new Web-based performance management service will be offered to customers?
The service will be offered through redhat.com as a subscription to customers beginning in Q3 2000. Bluecurve's customers have been asking for a services-based solution and we expect a smooth transition as we migrate them to the new redhat.com service.

Q: Describe the new performance services, and when will they be available? How much will they cost?
The Bluecurve technology enables customers to simulate real world traffic and load conditions for their Internet infrastructure. Red Hat will use the technology to create various traffic scenarios and fire these off to customer Web sites. Additionally, the Bluecurve technology will be deployed to enable remote measurement of Web services performance and availability in near real time.

Pricing for these services will be announced when they become available.

Q: Has Red Hat made any other significant acquisitions?
Red Hat closed the acquisition of Cygnus Solutions and Hell's Kitchen Systems, Inc. in January.

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.