Red Hat's revenues were up 11.4% to $174.4 million in its first fiscal quarter ended May 31. Subscription revenue was $148.8 million, up 14% year-over-year. It earned $18.5 million, or 10 cents a share, up 7%. Its non-GAAP income for the quarter was $28.7 million, or 15 cents a share, a penny better than expected.

It attributes its results to being cheaper than proprietary kit, particularly in this economy.

Operating cash flow totaled $61.2 million, as compared to $63.4 million last year. Deferred revenue now comes to $567.3 million, up 15% year-over-year and it's got $884.5 million in the bank.

It bought back $47 million worth of stock during the quarter. In the last year it has reduced its shares outstanding by approximately 11%.

Red Hat figures the spending environment is unlikely to improve much in the next few quarters, although at least now budgets are "known," it says. At the height of the meltdown they were a complete mystery.

Red Hat's service revenues dropped, which it attributed to strained travel budgets for training. JBoss is still growing faster than the rest of the company but not at the 2x rate it was recording. The company also took a hit from currency conversions.

Its top 25 accounts all renewed at a reported 120% of their original value but companies are now more likely to pay only a year at a time rather than take out one of Red Hat's prized three-year contracts.

Since Red Hat's direct sales force is responsible for the larger accounts, the breakdown between direct and channel sales was 39% to 61%. Apparently it only saw conversions of free to paid in small deals.

Billings growth, impacted by the decline in average contract terms, weakened for the third quarter in a row to $177 million, up 3% year-over-year versus the more usual 25%-30%.

The operating margin was 23.4%.

The company said it thought it would see revenues of $178 million-$180 million this quarter and earnings of 14 cents-15 cents.

Red Hat's contribution to the cloud seems to be limited to providing part of the infrastructure.

It claims it will benefit from Oracle's acquisition of Sun, whose Unix installations it has been merrily picking off for years. It says customers are uncomfortable with so much software concentrated in one vendor, OpenSolaris isn't a factor in the enterprise and that it "wouldn't want to be the guy comp'd on Unbreakable Linux," the version of Red Hat Oracle sells.