Red Hat (RHT), the leading provider of open-source software -- code that is developed and modified by users in the general public, is another attractive target. Oracle, IBM (despite a relationship with openware provider Novell [NOVL]), HP, and Japan's Fujitsu and NEC could each conceivably make a run at Red Hat, Male argues. "Now that it will have the hardware assets [from Sun], owning the predominant flavor of Linux could be potentially interesting to Oracle," Male says. Red Hat, which is expected to earn 67 cents a share in fiscal year 2010, has a market value of about $5.2 billion. Its shares traded last week around 28.

Open source code for developers

Also I’d look at Red Hat (RHT). There’s speculation that IBM might be interested in this company as a takeover target. - Guy Adami

Market Perform - Price 11.97 on Dec. 23
by Raymond James
RHT reported a solid [fiscal third-quarter '09] in a tough environment, although billings deceleration and lower renewal upside bear watching; $165 million revenue, up 22%...topped guidance of [up to] $171 million ....Our F09 [estimated] and F2010E revenues increase to $652 million and $738 million ....F10E non-GAAP EPS goes up 3 cents to account for a better margin run-rate. We still view Red Hat as the dominant choice in Linux for technical expertise...and breadth, [despite] uncertain impact from slowing server shipments. Market cap: $2.5 billion.

Red Hat, Inc., the world's leading provider of open source solutions, recently announced that its Board of Directors has amended the Company's previously announced program for the repurchase of its common stock and convertible debentures to increase by an additional $125.0 million the amount of debentures that may be purchased under the program.

The stock trades for 18x cash flow.

Hold -- Price 17.95 on Sept. 23
by Battle Creek Research

RHT trades at 36 times our fully-taxed calendar 2008 EPS estimate of 50 cents and 28 times our "09E of 65 cents. We believe RHT will ... gain traction in enterprise-data centers. However, we do not see a catalyst to increase share value at this time. Market cap: $3.4 billion.

From a recent Mad Money show: "I think their CEO tells a good tale. I like Red Hat."

Cramer Interviews Red Hat CEO: In this July 30 'Mad Money' clip Jim Cramer and Jim Whitehurst discuss Red Hat's stock and business.

Click here to watch the video.

From a recent Mad Money show:

"Oh boy. I have never called this one well. It's on my restricted list. I have never been right on this one. I'm not going to give you an opinion."

Red Hat (RHT) was downgraded from Buy to Neutral, Merrill Lynch said. Valuation call, as discretionary enterprise spending could slow down in the coming quarters.

Not catching much upside

computer

growth during tech rally