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Novell still a sick puppy

A bad year, a very poor fourth quarter

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Novell's dreadful financial year has come to a close with an equally poor final quarter. The fourth quarter is usually Novell's strongest but this time it saw revenue increase by only $3 million to $273 million from the last quarter and fall $72 million from the same quarter last year (that's 21 per cent). Profit for the quarter was down a sickening 99 per cent.

Novell now also holds the unhappy position of third-worst performer in Standard & Poor's 500 index.

Overall, Novell turned over $1.16 billion this year, compared to $1.27 billion last year. Not so dreadful, but look at net income: down from $191 million in 1999 to just $49 million this year - earnings per share from 55 cents to 15 cents.

"Fiscal 2000 has been a very difficult year for Novell following dramatic declines in traditional packaged software sales," said CEO Eric Schmidt. No kidding, Eric.

"Growth in new Net services did not accelerate fast enough to offset this decline. In 2001, our aim is to improve Novell's overall business performance around growth in new Net services."

That's true enough. Novell's traditional backbone of NetWare and the like has seen an appalling decline. Eric recognised this (some would say a little too late) and so tried to restructure the company around his new OneNet concept (subsequently stolen and repackaged as .NET by Microsoft). Things haven't gone quite according to plan - something we blame on Novell's inherent and consistent inability to market itself correctly.

When Q3 results were announced, Novell said it was going to take "additional action" to halt the decline and free up some money. Soon after it announced a 16 per cent cut in the workforce. These savings, claimed by Novell at the time to be worth $20 million, have been entirely offset by television advertising, the report said. We're sure all the sacked staff feel much better knowing they were less important that a couple of seconds of TV.

In terms of geography, revenue in the US was down six per cent over the year; in EMEA a whopping 20 per cent; and Asia Pacific up 13 per cent.

So what of the future? "By the end of 2001, we intend to have gained broad market recognition of Novell as an eBusiness Net services platform provider that delivers must-have capabilities including security, identity, acceleration and management. Novell's future business is based on Net services that enable traditional, and new Internet-based, IT resources to be mixed-and-matched as components of eBusiness solutions," said Eric.

Well, it has the goods, and a little leeway because Novell's focus has switched heavily into the shaky world on Net technology, so Eric has until Q2 we reckon to pull it off. Essentially he is betting the company on products like DirXML and iChain - which would explain the number of press releases we've received starting "International company chooses iChain for its Net strategy".

The suits weren't impressed and Novell's share price dropped by as much as 12 per cent. Oh dear. ®

Related Stories

Europe drags down Novell
Novell marketing VP talks turkey in last chance saloon
Novell does cut workforce - 16 per cent to go

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