Red Hat Gets Closer To Competing With Microsoft On Desktop; Releases Linux For PC; Company says its target remains corporate users and server-led networks.(INTERNET & TECHNOLOGY)

Byline: MURRAY COLEMAN

Though its stock has traded below 7 since March, Red Hat Inc. keeps chugging along as the most successful of the companies that deal just with the Linux operating system.

Analysts expect Red Hat's sales to rise this quarter. And six analysts polled by Thomson Financial/First Call forecast a slim profit for its third quarter, which ends Nov. 30.

But will that be enough to assure nervous investors? After reporting better sales and earnings for its August quarter, Red Hat's stock nose-dived. That's because though its sales rose 12% from August 2001 and 10% from the preceding quarter, they fell about $500,000 below analysts' expectations.

On Monday, Red Hat tried to answer any doubts about its staying power. It came out with a new version of the Linux operating system, one that's PC-oriented. That means it's moving closer to competing directly with Microsoft Corp.'s Windows operating system, which dominates the desktop.

"This is definitely a step toward making it easier for a general PC user to run Linux," said Stacey Quandt, an analyst with market tracker Giga Information Group.

But Red Hat doesn't call its latest product a full-blown rival to Windows.