Novell Rebounds In Fiscal 2004 On Linux Revenue

Novell reports a $31 million profit for the year, crediting the turnaround to its expanded Linux strategy.
Novell's move into the Linux market is paying off as the company Thursday reported $31.1 million in profit for fiscal 2004, ended Oct. 31, on $1.17 billion in revenue. A year ago, the Linux-less Novell lost $162 million on revenue of $1.11 billion.

A lot has changed for Novell over the past 16 months, starting with its August 2003 acquisition of Ximian Inc., a provider of Linux desktop and management software. Novell in January expanded its Linux strategy with a $210 million cash purchase of German Linux operating-system distributor SuSE Linux AG.

Novell continues to be a company in transition, CEO Jack Messman said during Thursday's earnings announcement. While its NetWare business continues to slowly decline, "we often see Linux as a catalyst for enterprisewide deals," he said.

For its fourth fiscal 2004 quarter, Novell swung to a $13 million profit on revenue of $301 million, compared with a $109 million loss on revenue of $287 million for the same quarter a year ago. The company attributes $12 million of its quarterly revenue to SuSE Linux-related business, with $7 million of that coming from sales of SuSE Linux Enterprise Server subscriptions. Novell sold 21,000 subscriptions for the quarter.

Messman said he's very pleased with the $536 million antitrust settlement Novell received recently from Microsoft. Novell will apply $448 million of that payment to its operating income in the first fiscal quarter of 2005, which will end Jan. 31. Still, Messman said he was disappointed that his company and Microsoft weren't able to settle on Novell's claim that Microsoft attempted to eliminate competition in the market for office-productivity applications during the time that Novell owned the WordPerfect word-processing application and the Quattro Pro spreadsheet application. Novell filed a lawsuit against Microsoft on Nov. 12.

February will mark the launch of Novell's Open Enterprise Server, a product that combines NetWare 7, SuSE Linux Enterprise Server 9, and Nterprise Linux Services, which interoperate between the NetWare and Linux. This will be the company's first combined NetWare/Linux offering.

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