Red Hat CEO replaces himself with Delta Airlines exec

In a shocking turn of events, Matthew Szulik suddenly stepped down this week as the head of Red Hat. With his company in solid financial shape, will its new CEO -- a former top exec at Delta Airlines -- change course in mid-flight?

Red Hat's long-time guiding light Matthew Szulik this week unexpectedly stepped down from the top spot at open source software company Red Hat, announcing that James Whitehurst -- a former Delta Airlines executive but also a computer programmer and Linux hobbyist -- will fill his shoes.

During a week in the Silicon Valley that also saw the resignation of Cisco Systems' once-rising star Charles Giancarlo from its CTO post, Szulik issued his own news during a financial earnings call.

Expecting to learn mostly about Red Hat's quarterly profits and revenues, participants were stunned to hear Szulik suddenly announce his resignation.

During a largely upbeat talk, Szulik cited personal issues related to family health problems as the reason for his departure as Red Hat's president and CEO. But he said he'll stay on with Red Hat as chairman.

Szulik pointed to Whitehurst's work as chief operating officer at Delta -- where he helped generate billions of dollars through the creation of the Orbitz travel Web site -- and at Boston Consulting as factors in Whitehurst's selection above high tech company executives who were also interviewed for the post.

"For me, I wanted to find at executive with an open mind and an unencumbered historial perspective," Szulik said during yesterday's conference. "Jim's work history is global, strategic, and execution-oriented."

Proving that the departure of a CEO isn't necessarily related to a company's financial performance, Szulik and Red Hat CFO Charles Peter cited strong sales during the third quarter of the fiscal year for both the Red Hat Enterprise Linux (RHEL) 5 operating system and Red Hat's JBoss middleware, along with recruitment of both new channel partners and customers, including a $1 million deal with a Latin American energy company.

At the same time, Red Hat is trimming costs through new initiatives such as a sales force automation (SFA) initiative rolled out earlier this year, Peters said.

Unlike its arch-rival in the Linux arena and Microsoft's new-found partner Novell -- which announced an earnings deficit despite a rise in revenues for its fourth fiscal quarter -- Red Hat delivered revenues of $135 million for the third quarter of its own fiscal year, for a year-over-year increase of 28%, along with a rise in net income of 12% or 10 cents per share, according to Peters.