Novell yawns its way to modest Q2

Linux makes NetWare stronger

By Ashlee Vance, 25th May 2004

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A lackluster second quarter inspired some lackluster comments from Novell management today.

Novell reported revenue of $294m for the period ended 30 April. This compares to revenue of $276m in last year's quarter. The slight increase in revenue helped Novell shrink its quarterly loss. Novell reported a loss of $15m in the most recent quarter compared to a loss of $29m in the same period one year ago.

Was Novell management thrilled with the quarter? Not quite. Executives, however, were "encouraged."

"In the quarter, Novell showed continued improvement in its financial performance during what is still a challenging market environment for the IT industry," said Jack Messman, CEO at Novell. "We are encouraged that NetWare-related revenue in the quarter declined only 2 percent from the year ago period, or a 5 percent decline after adjusting for foreign currency effects. This figure compares to the prior year's decline rate in NetWare-related revenue of 12 percent, after adjusting for foreign currency effects. We believe this slowing of the rate of NetWare-related revenue decline reflects a favorable response from our customers to our Linux strategy."

Most major vendors have pointed to an overall improvement in IT spending, so it's a bit weird for Novell to call out a "challenging" market. But any weirdness can be explained by the limbo Novell finds itself in as it tries to move from a NetWare past to a Linux future. The purchases of SuSE and Ximian along with IBM's $50m investment are meant to carry Novell to the lead of open source software. ®