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Restructuring costs drive Novell into the red

Profit restructured off P&L

Bridging the IT gap between rising business demands and ageing tools

Novell has swung from profit of $15m last year to record a fourth quarter loss of $5m, despite an upsurge in revenue. For the quarter ending 31 October, Novell reported revenue of $320m, compared to revenue of $301m for Q42004. Excluding restructuring charges of $38m, the enterprise software supplier said it would have earned $33m.

The enterprise software maker's revenue came out ahead of analyst's expectations of $300m. Last month Novell announced plans to axe 600 jobs and accelerated plans to spin out its consulting business in an attempt to cut costs and return to growth. Novell plans to focus its efforts in the Linux and Identity markets.

During Q4 2005, Novell made Linux platform sales of $61m, up 418 per cent from Q4 2004. Linux platform revenue included $46m from sales of Open Enterprise Server and $15m of revenue from other Linux products and services. For the full fiscal year 2005, Novell reported Linux platform revenue of $148m, up 278 per cent from FY2004.

Novell also increased sales of identity management software by 35 per cent in Q4 2005, bringing in $84m. Identity-driven computing revenue for the FY2005 totaled $258m, an increase of 14 per cent year over year.

"We are very pleased with the strong finish we had in this fiscal year," said Jack Messman, Novell chairman and chief exec.

For the year as a whole, Novell made profits of $378m on sales of $1.2bn. Novell's figures were buoyed by the cash injection from a $448m net legal settlement with Microsoft.

Looking ahead, Novell expects to record net revenues for Q12006 of between $260m and $270m. ®

Application security programs and practises

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