It would seem the market sees these benefits too. Red Hat shares, which are trading at near all-time highs, gained as much as 1.4% Monday, reaching $80.39. This more than compensated forthe disappointing outlookthe Raleigh, NC-based company issued last Thursday, which sent its stock down almost 2%.

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For the current quarter, Red Hat expects to earn adjusted earnings per share of 44 cents (up 7%) on revenue of $492 million to $496 million, translating to increases of 10% to 11%. Analysts polled by Thomson Reuters forecasted 45 cents revenue of $493.2 million.

The lower EPS suggests Red Hat plans to invest in sales, marketing, and research and development to position itself as the go-to cloud vendor. This explains why its sales and marketing expenses climbed more than 12% during the just-ended quarter to $198.8 million. Likewise, Ramp;D expenses trended higher by more than 8% to $97.4 million.

Given Red Hats global reach as a large multinational company, its also possible the company is also being cautious with its outlook, not wanting to set expectations too high. During the conference call with analysts, CFOPeters cited foreign exchange headwindsas having negatively impacted first-quarter revenue by some $36 million.

From my vantage point, this is one of those cases where investors would be better served brushing off the implied EPS weakness in Red Hats outlook. It would appear Red Hat plans to make similar to higher investments in Ramp;D and sales and marketing to grow its business. And with Calderoni coming onboard, Red Hats investments stand a better chance of paying off.

And this underscores what Red Hat has been able to do in terms of execution. The enterprise cloud and software virtualization specialist just extended its streak of consecutive quarterly earnings beats to eleven. For the quarter ended May, the company posted adjusted earnings per share of 44 cents, marking a 29% jump year over year, while revenue of $481 million climbed 14%.

Moreover, not only did both revenue and earnings top Wall Street estimates, but the quarter marked the thirteenth reporting period during which Red Hat has posted growth in total revenue and subscription revenue in the mid-teens to 20%-plus range(in terms of US dollars).

In short, with Red Hat firingon all cylinders, andwith itsacquisitionof a seasoned finance chief, investors should want to own thestock for the long term. The company still hastons of room to grow, which will translate to higher share prices in the quarters and years ahead.

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