Novell Planning Layoffs?

Weeks after announcing a second quarter loss, Novell is mulling significant staff cutbacks, likely in its European offices, according to sources familiar with the situation.

It is not clear whether the SUSE Linux division, located in Germany, will be the sole target for the layoffs. Sources close to Novell employees in Europe have indicated that non-SUSE divisions in Europe have been asked to cut back, as well.

One Novell manager in Europe was apparently asked to reduce staff by 25 percent, a source said. But it is not known if this percentage figure is universal across every department.

The exact timing for the layoffs is also not known but may be at the end of this month, according to a Novell employee.

These layoffs, if they do occur, would be a likely cost-cutting move after Novell’s second quarter loss of US $16 million, which the Waltham, Massachusetts-based company announced May 26.

Novell’s report identified declining sales of their older Netware software business coupled with just a 6 percent rise in sales on the Linux side of the business as a significant contributor to its loss.

Specifically, European sales figures were specifically targeted as a problem, which suggests the cuts may not just target the SUSE Linux division.

During a conference call to discuss the earnings, Novell CEO Jack Messman stayed very positive about Linux, citing recent sales to the U.S. Department of Health and Human Services and several Fortune 500 companies, including Circuit City and Toronto-Dominion Bank in Canada.

Novell has made it well known that its future depends on the success of its Linux sales. But this time of transition could also be a bumpy ride.

But while Novell seems to be making cost-cutting measures across the board and not just targeting SUSE, it is not clear how SUSE Linux employees and management are enjoying life under the Novell banner.

Recent departures from Novell include former SUSE Linux head Richard Seibt, vice chairman Chris Stone, and chief technology officer Alan Nugent.

Bruce Lowry, Novell’s director of press relations, said: “Novell does not comment on any rumors or speculation that’s out there.”

Brian Proffitt is managing editor of LinuxToday, where this story first appeared.