Matthew Szulik, CEO of Red Hat

This is a partial transcript from Your World with Neil Cavuto, March 20, 2002. Click here for complete access to all of Neil Cavuto's CEO interviews.

NEIL CAVUTO, HOST: What do you think Microsoft fears most? Well, I'm going to give you a hint. It's not lawsuits or state attorneys general or the U.S. government itself. It's something called Linux, a widely popular, though widely misunderstood, operating program that some say has Windows beat hands down.

No wonder the folks in Redmond liken Red Hat (RHAT), a top distributor of Linux, to the red scare. Red Hat under pressure today. The stock off more than 17 percent on some disappointing quarterly numbers. No matter, it's still got the folks in Redmond red-faced. Why?

Joining me now is the CEO of Red Hat, Matthew Szulik. Matthew, good to have you back.

MATTHEW SZULIK, CEO, RED HAT: Hey, nice to see you again, Neil.

CAVUTO: You know, the Microsoft (MSFT) guys were probably salivating when they seem to indicate, you know, are you having some troubles. Are you?

SZULIK: Troubles? I thought we had a good quarter.

CAVUTO: Yeah, Wall Street has a funny way of reading that.

SZULIK: Yes, 17 referenceable accounts. You know, a year ago, we were told we could not compete in the enterprise, and here we are doing a good job. The business is generating cash. We're profitable, got 19 of the world's leading largest software vendors moving their applications over to Red Hat Linux. This is good news.

CAVUTO: Then what happened, Matthew? You lost a fifth of your value today.

SZULIK: Well, you know, I think the top line, we did not get some things done on the sales side that I hoped we would have within the quarter. But I think, you know, we are transitioning the company from a box-oriented retail business now to an enterprise solutions provider. And the validation point was companies like AOL (AOL), Cisco (CSCO), Amazon (AMZN), et cetera, now adopting Red Hat Linux and our company in a big way. And I think that is what have the folks in Redmond nervous.

CAVUTO: But don't you need them to be hurting or dead for you to thrive?

SZULIK: I do not believe that our success necessarily is dependent on their collapse or failure. Right now, our focus is on the Unix to Linux migration. And that's a multi, multibillion dollar marketplace where old Unix machines are now -- the expense associated with them is now being transferred over to the Red Hat Linux and the Intel...

SZULIK: Yes, but, Matthew, you can't tell me that if this court case goes swimmingly for Microsoft and it ends up with just a slap on its wrist, that your stock is going to go running up on that?

SZULIK: Well, I'm certainly hopeful that there won't be another slap on the wrist. This is...

CAVUTO: So you want to see them nailed to the wall?

SZULIK: I think the majority of the computer industry wants to see that. It would open up competition and create more choice.

CAVUTO: I don't know about the majority of the industry wants to see it, but you're saying that, in other words, if they come out of this with really no serious punishment, would you be worried?

SZULIK: I would not be worried because one of the beautiful things about opened source computing is that we have hundreds of thousands of people now that are participating in the public that are building, helping us generate great technology and giving the consumer choice, unlike one single small proprietary product-oriented company.

So globally, you know, look at China, look at the European marketplace, you look at the progress that we're making in Japan, this is now much bigger than a product-oriented movement.

CAVUTO: So when you look at these guys at Microsoft and their obsession with seeing you buried, not personally, but your company, you pay no heat?

SZULIK: Of course, no, we pay lots of heat. But, you know, I just produced 17 large global enterprise accounts that are making movements over to Red Hot Linux and I have got now large ISVs moving over to our platform. This is really good news.

CAVUTO: So life goes merrily on?

SZULIK: Well, you know, we are paying very close attention, Neil.

CAVUTO: OK. Matthew Szulik, I appreciate it. Thank you, sir.

SZULIK: Good to see you.

CAVUTO: The Red Hat CEO out of Raleigh, North Carolina, Matthew Szulik.

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