Novell results are outstandingly mediocre

Not yet for One Net

By John Leyden, 24th August 2001

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Novell has posted third quarter results which the current industry buzz about Web services software has yet to translate into a boost in sales for the networking software and services firm.

Third quarter revenues for Novell came in at $247 million which resulted in a net loss of $19.3 million, once a $30.4 million restructuring cost was factored in. This compares to sales of $270 million and profits of $8.6 million for the same period last year.

Novell acquired consultancy Cambridge Technology Partners on July 10, which contributed $20 million in revenue during the quarter and added $27 million to its costs

"The pronounced, and continuing, IT market downturn means lessened expenditures for network infrastructure, and solutions consulting, and this has impacted Novell," said Jack Messman, president and chief executive officer of Novell. "Novell's growth is dependent on an improving IT market moving to ebusiness solutions."

Of concern to Novell is that revenue from its traditional product base markedly declined, so its fortunes are very much tied to its fresh focus on Net services software, which Novell calls called One Net, and consultancy.

The firm's large network site-license business, by far the largest slice in its revenue cake, declined by 3 percent to notch up $167 million this quarter.

Net Management Services revenue for Novell's third quarter was $170 million, down 6 per cent, and Net Directory Services sales were $5 million, down an alarming 39 percent on second quarter figures.

Looking ahead, Novell sees only a "slight sequential revenue improvement" in its software business, but $80m in revenue for its Cambridge Technology Partners consultancy business. Novell predicts its fourth quarter revenue will be between $305 and $315 million. ®