Open-source-software veteran Red Hat (NASDAQ:RHAT) reported quarterly results Tuesday night, and today the stock is trading 22% lower than it finished yesterday. I know what you're thinking: "Oh, well, Red Hat missed its earnings target." But it's not quite that simple.

On a GAAP basis, Red Hat did disappoint, with just $0.05 per diluted share in net earnings, up from $0.09 a year ago. But sales spiked to $99.7 million -- a 52% year-over-year increase and $2.6 million higher than expected. Yes, analysts wanted to see EPS of $0.11 or so, but the Thomson First Call polls always ask for forecasts on adjusted earnings, not necessarily GAAP.

In Red Hat's case, the company met expectations exactly on an apples-to-apples pro forma basis. The difference comes down to -- shock, horror -- stock-based compensation of $7.4 million, offset by $1.2 million of income tax changes caused by the new accounting rules for options grants.

So why the vertigo-inducing price drop, then? Well, all is not roses in Linux Land. Even if you back out those compensation expenses, operational costs were up significantly to $67.6 million. Last quarter, sales, general, and administrative expenses totaled $50.9 million (again excluding $7.6 million of stock-based compensation), and the figure last year was a mere $42.2 million. This is likely a direct result of the acquisition of open source "middleware" software firm JBoss that closed during the quarter.

That deal had some less obvious effects, too. Management says the results should have been better, but productivity dropped as the sales force and engineering staff boned up on what JBoss is and how it works.

I don't think the price drop is entirely fair. Yet another ingredient in this complex earnings stew is the rising proportion of three-year support contracts in place of the traditional one-year deals. That is, of course, a good thing, but it means that Red Hat won't recognize a good deal of revenue it has already earned until next year or beyond. That should mean good things for the coming reporting periods, and year-ago comparisons will soon start to look at the same species of fruit, given that the company has reported options expenses on the income statement for two quarters now.

Red Hat can't afford to rest on its laurels, though. Sun Microsystems (NASDAQ:SUNW) appears to be getting its act together -- finally -- and there's always the chance that Novell (NASDAQ:NOVL) might decide to give its SUSE Linux product line the TLC it deserves. Microsoft's (NASDAQ:MSFT) Windows Vista is nearing its final release, crowding the marketplace some more. With IBM (NYSE:IBM) seeking a final resolution to SCO's (NASDAQ:SCOX) Linux lawsuits now, with the very probable outcome of removing legal doubts about the operating system's business viability, this would be a good time to don the red fedora and put the pedal to the metal.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here, and he's a Debian and Ubuntu fan. I am what I am because of what we all are. You can check out Anders' holdings if you like. Foolish disclosure is always state-of-the-art.