Novell Posts Belated 4Q Results

Novell on Thursday delivered its fourth-quarter earnings report a week later than expected, posting a net loss of $17.9 million, or 5 cents a share, on sales of $245 million.

On a non-GAAP basis, the business software developer earned $20 million, or 6 cents a share, good enough to hurdle analyst estimates calling for a profit of 4 cents a share in the quarter.

Novell was originally scheduled to release its fourth-quarter results on Dec. 5 but the company decided at the last minute to delay the report while it awaited a response to its most recent letter to the Securities and Exchange Commission.

Citing what it called an “abundance of caution,” the Waltham, Mass.-based company sent out a press release on the morning of Dec. 5 detailing its decision to delay the release of its financial reports while it exchanged letters back and forth with the SEC regarding financial reports it filed for the second quarter of this year and all of 2006.

On Wednesday, Novell announced the SEC had completed its review of the company’s prior financial results. The SEC determined no further changes to the past reports were required.

The $244.9 million in sales represents a five percent improvement from the year-ago quarter when it recorded sales of $233.8 million. For the full fiscal year, Novell earned $44.5 million, or 13 cents a share, up from $18.7 million, or 5 cents a share, in fiscal 2006.

The quarterly results were buoyed by $22 million in sales from its open source software division, a 69 percent surge compared to the year-ago quarter. Novell said most of those sales came from its Linux products. Novell also absorbed a loss of 3 cents a share in the quarter related to the sale of its Switzerland-based business consulting division in the fourth quarter.

Sales from its identity and security management software was $33 million while revenue from its systems and resource management products rose 5 percent from the fourth quarter of 2006 to $36 million.

“We are pleased with our overall results for 2007,” CEO Ron Hovsepian said in a prepared release accompanying the financial results. “While undergoing transformational change, we grew revenue and exceeded our operating targets. We are on the right path to long-term, sustainable profitability.”

“Overall, we think they posted strong results for the quarter but they could have done a better job at delivering the news,” Abhey Lamba, an analyst at UBS, wrote in an e-mail to “Secondly, management will increase its focus on software revenue while shifting [its] low-margin services business to channel partners. We agree with management’s strategy as it could help the company get back on the growth track while driving margin expansion.”

The company expects to sales for fiscal 2008 to check in between $920 million and $945 million and operating margins of between 7 percent and 9 percent for the full fiscal year.

Novell’s stock trimmed 3 cents a share, or less than 1 percent, to $7.07 in Friday afternoon trading.

News Around the Web