Novell Overhaul Starting to Bear Fruit

Novell can finally put its rocky year behind it and concentrate on a better tomorrow, its top executives said on Thursday.

The Waltham, Mass., software company announced its fourth-quarter and full-year 2005 results, which showed some progress as well as continuing challenges.

Revenues for the quarter were $320 million, up $19 million from the same quarter last year. For the year, revenues rose from $1.16 billion in 2004 to $1.19 billion this year, though the slight bump was largely because of its $536 million legal settlement with Microsoft in November (Novell officials only recognized a net of $448 million).

Using Generally Accepted Accounting Principles (GAAP), Novell saw a net loss $5 million on the quarter, but on a non-GAAP basis Novell recognized a net income of $25 million. The non-GAAP figure excludes one-time charges such as the restructuring hit the company took when it laid off roughly 600 employees Nov. 2 and announced it would focus on Linux and identity products.

That mass layoff was the latest chapter in Novell’s two-year overhaul. This year saw an executive shakeup as well, with the departure of former Novell CTO Alan Nugent to Computer Associates and head of Europe, Middle East and Africa operations Richard Seibt in May.

Jack Messman, Novell chairman and CEO, said that was the last of the major changes, although company officials will continually assess their business operations and make the necessary changes.

“We’re starting to see our strategy reflected in our financial results,” he said in a conference call. “Large enterprises are making significant commitments, often across a number of product lines, to Novell as one of their strategic technology vendors.”

Identity, which includes their ZenWorks resource management line, and Linux are Novell’s future, and the numbers this past quarter show why they’ve pinned their hopes on the two product lines. According to its balance sheet, Linux platform revenues were $61 million in the fourth quarter, up from $47 million in the same quarter last year.

Identity and resource management products on the other hand saw revenues of $33.6 million and $50 million, respectively. Last year at this time, the identity had quarterly revenues of $28.2 million and resource management saw $33.6 million.

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