When Red Hat announces quarterly results March 25, the news may confirm what Wall Street has suspected since November 2008: Despite Novell’s continued momentum with SUSE Linux, the smarter money remains on Red Hat’s open source strategy. Here’s why.

Check out the one-year stock charts for Novell (NOVL) and Red Hat (RHT). Neither chart is particularly impressive, but the trends are unmistakable. As the economy went from bad to worse in calendar year 2008, Wall Street lost more and more faith in Novell. In stark contrast, sometime in late November 2008 — amid heightened credit crunch concerns — financial pundits started betting heavier and heavier on Red Hat shares.

The reasoning is obvious. Red Hat is a pure open source play with two market-leading solutions: Red Hat Enterprise Linux and Jboss. And remember, the Jboss business is growing faster than Red Hat’s Linux platform business.

Oh, and Red Hat did land at the top of The Open Source 50, which tracks the most promising open source partner programs. (Although Novell landed in the No. 3 spot…)

Snapping Together Or Falling Apart?

Meanwhile, Novell is a hodgepodge of open source, closed source, home grown and acquired companies. SUSE Linux sales continue to climb. And acquisitions like PlateSpin provide promising revenue opportunities for Novell. But Novell’s latest quarterly earnings failed to impress our resident blogger.

What’s holding Novell back:

Ironically, we’ll get a clearer picture regarding Novell’s financial standing when Red Hat announces quarterly results March 25. If Red Hat has another strong quarter, it will suggest Novell may need to shed more legacy products even as it acquires and builds new ones.

The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS feed, Twitter feed and Resource Center.