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Novell number up as Schmidt prepares recovery phase three

Aims to be broadest supplier of Web infrastructure products

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Novell has turned in revenue of $345 million in its fourth quarter, up from $298 million in the year-earlier quarter, and $327 million in Q3. Net income was $74 million compared with $43 million a year earlier, and $49 million in Q3. Novell's FY ends on 31 October. For the fiscal year, Novell made $1.155 billion (up 30 per cent on FY98), with net income of $191 million (up 87 per cent on FY98). By product category in Q4, NetWare produced $176 million, directory-enabled applications reached $90 million (ZENworks, BorderManager and NDS for NT), while service, training and consultancy produced $50 million. Novell's older products contributed $29 million, or just 9 per cent of revenue. EMEA sales were up 29 per cent in Q4, Asia Pacific was up 31 per cent, and the US up 7 per cent. The Americas excluding the USA increased 32 per cent in the quarter. In the analysts call, CEO Eric Schmidt was clearly happy that "the strategy continues to work" and anticipated moving into phase three of Novell's recovery. Phase one was the turnaround, which Schmidt said was reached last September with the launch of NetWare 5, while phase two was growth based on its traditional business model. Phase three would include the exploitation of intranet services, which would include a mix of NDS growth, and eDirectory which was announced at Comdex, initially for NetWare, Solaris and NT4, but planned in the first half of next year for Linux, Tru64 and Windows 2000 ("when and if it shows up", Schmidt remarked enigmatically). Novell and Sun recently announced a joint marketing agreement for NDS eDirectory. Schmidt also foresaw a considerable growth in consultancy. Novell says it has now aligned its marketing and product development, with co-ordination responsibility under one person. The company had also bought back $403 million of its shares in the year, spent $114 million on venture capital projects, and had $895 million in cash. In addition, the company has $61 million in unrealised gains, compared with $64 million in unrealised losses last year. The Corel shares Novell acquired when it disposed of WordPerfect were evidently sold just too soon to gain from the considerable increase in Corel's share price, mostly related to its Linux announcement. Schmidt said that Novell's role is to be the broadest supplier of Web infrastructure products - what is being called internally "in the flow, in the Net services". A major revenue growth area in the coming years is expected to be network caching products, with Novell now having 12 OEM partners for its Internet Caching Service, including Compaq, Dell, Hitachi, IBM, Legend (China), NEC, and Toshiba. Novell also intends to enter new software product categories, particularly Internet-related areas that are still in an embryonic stage. These include e-commerce infrastructure, personal identity control, policy-based management, cache management, and public key security. ®

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