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Re: GNU licenses

From: Alexander Terekhov
Subject: Re: GNU licenses
Date: Wed, 06 Sep 2006 14:46:12 +0200

David Kastrup wrote:
> Well, the last filing is at
> <URL:>, and lo-and-behold,

See Full Filing, not summary, retard. Quotes from latest 10-Q:

Open source software is an alternative to proprietary software and 
represents a different model for the development and licensing of 
commercial software code than that typically used for proprietary 
software. Because open source software code is freely shared, there 
are no licensing fees for the distribution of the open source 
software. Therefore, we do not recognize revenue from the licensing 
of the code itself. We provide value to our customers through the 
aggregation, integration, testing, certification, delivery, maintenance 
and support of our Red Hat enterprise technologies, and by providing 
a level of scalability, stability and accountability for the 
enterprise technologies we package and distribute. 

The Company recognizes revenue in accordance with Statement of 
Position No. 97-2, Software Revenue Recognition (“SOP 97-2”), as 
amended by Statement of Position No. 98-4, Deferral of the Effective 
Date of a Provision of SOP 97-2, and Statement of Position No. 98-9, 
Modification of SOP 97-2, and Staff Accounting Bulletin No. 101, as 
amended by Staff Accounting Bulletin No. 104. The Company establishes 
persuasive evidence of an arrangement for each type of revenue 
transaction based on either a signed contract with the end customer, 
a click-through contract on the Company’s website whereby the 
customer agrees to the Company’s standard subscription terms, signed 
distribution contracts with original equipment manufacturers (“OEMs”) 
and other resellers, or, in the case of individual training seats, 
through receipt of payment which indicates acceptance of the 
Company’s training agreement terms.

Our subscription-based contract model may encounter customer resistance.

The subscription agreement used for many of our products, including 
Enterprise Linux, requires customers to agree to a subscription for our 
services for each installed system on which they deploy our 
subscription based products. At the same time, the subscription 
agreement places no restriction on the customer’s right to redistribute 
the products. While we believe this practice complies with the 
requirements of the GNU General Public License, and while we have 
reviewed this practice with the Free Software Foundation, the 
organization that maintains and provides interpretations of the GNU 
General Public License, we may still encounter customer resistance to 
this distribution model. To the extent we are unsuccessful in 
promoting or defending this distribution model, our business and 
operating results could be materially and adversely affected. 

If our current and future customers do not renew their subscription 
agreements with us, our revenue and operating results may be adversely 

Our customers may not renew their subscriptions for our service after 
the expiration of their subscription agreements and in fact, some 
customers elect not to do so. In addition, our customers may opt for a 
lower priced edition of our service or for fewer subscriptions. We 
have limited historical data with respect to rates of customer 
subscription renewals, so we cannot accurately predict customer renewal 
rates. Our customers’ renewal rates may decline or fluctuate as a 
result of a number of factors, including their level of satisfaction 
with our service and their ability to continue their operations and 
spending levels. If we experience a decline in the renewal rates for 
our customers or they opt for lower priced editions of our offerings 
or fewer subscriptions, our revenue and operating results may be 
adversely impacted. 

They sell subscription service for freeware (revenue wise) delivery,
maintenance service, blah-blah-service-la-la, moron. They simply 
moniker it as "sales of technology" for summary.


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