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For the Year
For the full year, Novell reported sales of $956.5m, up 2.6 per cent, and a net loss of $8.7m, which was a lot better than the $44.5m loss it had in fiscal 2007. The Open Platforms division accounted for $128.8m in sales in the full fiscal year, up 37 per cent, and the Workgroup division posted sales of $366.2m, down 1.8 per cent. OES was a stopgap product to help preserve the NetWare base and maybe convert some workloads to Linux, and by and large the strategy has worked. But it has not yielded the kinds of profits Novell wants. For fiscal 2008, Novell's identity and security management products had $137.2m in sales, up 9.2 per cent, while its systems and resource management products accounted for $170.5m in sales, up 15.4 percent.
Novell has burned a bit of cash doing acquisitions, buying back its own stock, buying back debentures, and running itself in the past year. The company had just under $1.1bn in cash and equivalents and $777m in short-term investments as fiscal 2007 came to a close, but finished fiscal 2008 with only $680m in cashish and $387.8m in short term investments. Novell had around 4,000 employees, down about 100 from the prior quarter because of restructurings.
Ron Hovsepian, Novell's president and chief executive officer, said in the call that of the $240m in SUSE Linux licenses that Microsoft said it would acquire with its landmark November 2006 partnership, $195m have been invoiced so far. He added that Microsoft has agreed to buy $100m in additional SUSE Linux licenses for servers and has taken $25m worth of licenses from this second round that will be booked in the first quarter of fiscal 2009. (Why not just clean out the first round of licenses? Good question. But this is the IT business).
Hovsepian said that Novell added more than 3,000 Linux customers in fiscal 2008 and gained 3 per cent of market share in the Linux space and outgrew the Linux industry (which he pegged at 22 percent growth). And he banged on about how SUSE 9 and SUSE 10 have 2,500 certified applications, which he claimed is more than for other Linuxes. (This means you, Red Hat). Such claims are dubious from all operating system makers.
All in all, Hovsepian was pretty upbeat, saying that when Novell started out fiscal 2008, it was expecting double-digit declines in its legacy NetWare and OES business, but only saw a decline of 1.8 per cent. He added that there was some softness in the fourth quarter and said Novell would be cautious and monitor the situation.
He added that Novell was pleased that over 60 per cent of Novell's revenues come from recurring maintenance or subscriptions, but said Novell was not comfortable, given the current economy climate, to make projections for future quarters individually or for fiscal 2009. Russell added that Novell felt "feels good" about the first quarter of 2009 so far, but forget about getting any hard numbers. ®
COMMENTS
Crush Profits?
I don't think crush is the right word as far as Novell profit's are concerned. 33% in linux sales is huge milestone and foreshadows what's coming as far as linux servers AND desktops are concerned. SLES and SLED are solid OS's regardless of what Red Hat fans will tell you. And we're a Novell shop too, so I guess I'm being a little biased here. However, when your enterprise runs smooth you have to thank your underlying operating systems and software that handle your workload. Mainly SLES 10 with OES 2 SP 1. And I like the small increase in Identity Management solutions. We use Novell's Identity Manager Vault and I know a few other enterprises who can do all sorts of crazy things with it compared to other identity management products.
Less loss!
Well! As a NetWare admin, hearing that the loss has slowed a bit from expectation is good news. From my point of view, this may have more to do with Open Enterprise Server v2 being significantly better than the v1 version of it, and thus seeming to be a viable successor to what we've been using for the last, er, 20+ years. It has been a while, hasn't it?
SP1 for OES2 posted the day before Novell announced their financials and includes more things to complete the 'missing feature' list from NetWare, like a functional AFP stack, and a CIFS stack that can scale into the 1000's. Two things that make it coexist better in this macbook fueled world.
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