Report: Red Hat Inc. in Talks With AOL Time Warner

Both companies declined to comment Saturday on a published report that AOL Time Warner Inc. is negotiating to buy the Linux distributor Red Hat Inc.

The Washington Post reported late Friday that AOL Time Warner Inc. was in talks to buy Durham-based Red Hat, citing sources familiar with the situation.

The deal could bolster AOL Time Warner's against rival Microsoft as both companies design strategies for moving their services beyond the personal computer to mobile devices and such nascent services as interactive television.

"As a company policy, we don't respond to rumors," Red Hat spokeswoman Melissa London told The Associated Press on Saturday in response to the report.

AOL Time-Warner spokeswoman Tricia Primrose also declined to comment Saturday.

Red Hat packages and sells a version of the Linux operating software, whose basic code is open and public. While popular for Web servers because it is relatively cheap and very stable, Linux has barely penetrated the desktop market dominated by Microsoft.

Nearly all of AOL's subscribers use desktop computer software that runs on top of Microsoft's Windows operating system.

But the service could easily be configured to run on Linux, as an Internet appliance offered by Gateway did until it was discontinued last year.

In addition, AOL owns the Netscape browser, which is distributed for free and offers a version for Linux.

Many handheld portable computers currently in development also run on Linux.

Red Hat, with 600 employees, reported a $15 million loss in its latest quarter, an improvement from a $55.3 million loss in the previous quarter.

Red Hat and IBM recently announced a partnership in which Red Hat would provide Linux software and services for IBM's eServer line of Web servers for business.

Red Hat was founded in 1994 and went public in 1999, with its stock soaring from $14 to a high of $286.25. The stock price fell as the technology stock bubble burst, but it's made a minor comeback recently.

Red Hat announced Thursday it was moving its headquarters to Raleigh on North Carolina State University's Centennial Campus.