Feeds

Attachmate acquisition stalls Novell's Q1

Don't blame SUSE Linux

Website security in corporate America

Novell is in the process of being eaten by Attachmate and having some juicy patents sold off to a holding company controlled by Microsoft, Apple EMC, and Oracle. And the company's top brass took a zero for the day and didn't face Wall Street when Novell announced its financial results for the first quarter of fiscal 2011 ended in January.

And for good reason. Novell's executives, who are back in the company's Waltham, Massachusetts offices, don't want to do anything to put the kibosh on the $2.2bn Attachmate acquisition, which was approved by Novell shareholders three weeks ago. Ron Hovsepian, president and chief executive officer at Novell, and the other top execs and techs of the company don't want to do anything that might upset the Attachmate-Microsoft apple cart.

To get the deal done, Attachmate needs to sell 880 patents to CPTN Holdings, the Microsoft-sponsored holding company, for $450m; it also needs for Novell to not spend one red cent of that $1.1bn in cash it has in the bank. Net-net, Attachmate can get ahold of Novell for around $707m, which is looking like a little less than one year of revenues at Novell's current run rate.

None of the executives at Novell were even quoted in the press release and Novell did not make any effort to notify anyone that it was reporting its financials.

In the quarter ended January 31, all of Novell's businesses were down. The company had $20.4m in software license sales, down 3.8 per cent compared to the year-ago period. Maintenance and subscription revenues dropped 5.4 per cent, to $150.4m, which services sales were off 10.3 per cent, to $19.9m. All told, Novell's sales fell 5.8 per cent in fiscal Q1, to $190.7m.

Starting a few quarters ago, Novell lumped together operating systems, management, and security tools into one category. In fiscal Q1, this group of products accounted for $12.7m in licenses, $14.4m in services, and $93.3m in maintenance and subscription fees, for a total of $120.4m. Maintenance and subscription revenues were flat year on year, but new license sales in this group of products fell by 32.9 per cent to $12.7m.

Services revenues for these three areas fell by 10.5 per cent, to $14.4m. This area, which includes SUSE Linux, had a loss from operations of $409,000, a shift from an operating profit of $411,000 in the year ago period. Linux maintenance and subscription revenues actually rose by nearly a point, to $37.8m, in the quarter. So don't blame SUSE Linux. Then again, Red Hat was be able to grow at 20 per cent per quarter, even during the economic downturn in 2008 and 2009, so maybe the lack of SUSE Linux growth is a problem.

Novell's other product category is collaboration solutions, which lumps together NetWare, Open Enterprise Server (a hybrid Linux-Netware OS), and GroupWise collaboration tools. This unit had $7.7m in software license sales in Q1 of fiscal 2011, also flat, and maintenance and subscription revenues for these productrs added up to $57.1m, down 10.5 per cent.

Novell has been converting short-term investments into cash, presumably to make the Attachmate deal work, and sold off $291.1m in investments in Q1. This had tax consequences, of course, nearly quadrupling the company's taxes to $33.5m. Even before the taxes, Novell's income from operations was down 46.1 per cent in the quarter, but after all the numbers were added up and the taxes were paid for net income and investment sales, Novell swung to a $17.9m loss, compared to a $20.2m profit in Q1 of fiscal 2010.

Novell ended the quarter with $981.4m in cash and $150m in short-term investments. Together, this cashish pile was about the same as at the end of fiscal Q4 of 2010. The company's deferred revenue (both short and long term) took some hits in the quarter, and added together, amounted to $592.8m, down 8.9 per cent sequentially from the October 2010 quarter. ®

Reducing the cost and complexity of web vulnerability management

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
OECD lashes out at tax avoiding globocorps' location-flipping antics
You hear that, Amazon, Google, Microsoft et al?
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.