Novell Earnings Down In 4Q - InformationWeek

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Novell Earnings Down In 4Q

Novell on Tuesday reported continued weak earnings for its fourth quarter and its fiscal year 2000. It attributed the losses to an ongoing decline in its traditional NetWare software business.

"I'd say we've had a pretty difficult year," chairman and CEO Eric Schmidt says. But he adds that the company is about six months into an effort to transform itself into a more services-oriented business, which should rescue it from the financial doldrums.

Novell reported fourth-quarter revenue of $273 million, down from $345 million in the same period last year. Because of a $48 million restructuring charge taken in the fourth quarter, the company reported an 11-cent-per-share loss for the period. For the fiscal year ended Oct. 31, Novell's revenue was $1.16 billion, down from $1.27 billion last year. Profit for fiscal year 2000 was $49 million, or 15 cents a share on a diluted basis, down from $191 million, or 55 cents a share, in fiscal 1999.

During the year, Novell's sales of packaged software, mainly its NetWare product, dropped by $243 million, or 47%, according to the company. NetWare sales now account for 23% of Novell's total revenue, executives say. One growth area, the sale of large network site licenses and revenue from original equipment manufacturers, produced revenue growth of 12% for the year, reaching $750 million and generating 65% of the company's total revenue.

Dennis Raney, executive VP and CFO, says Novell expects continued weak revenue growth until it fully realizes a sales boost from its eBusiness Net services initiative and a reshuffling of its channel partners in the systems integration and service provider markets.

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