On the Up and

By Steven Vaughan-Nichols  |  Posted 2005-12-01 Print this article Print

Up"> In short, the Linux business is starting to go well for Novell. Curiously, Novells NetWare business also showed a small uptick of 3 percent.
Nevertheless, Novell remains certain that "year over year, it will decline," said Jack Messman, chairman and CEO of Novell, in a press conference,
At the same time, during the fourth fiscal quarter 2005, Novell recognized $84 million of Identity-driven computing revenue, up 35 percent year over year. This was this sectors "strongest quarter ever," said Messman. For the full year, identity-driven computing revenue totaled $258 million, an increase of 14 percent year over year. "We are very pleased with the strong finish we had in this fiscal year," said Messman. "Our quarterly revenue and profitability on a non-GAAP [Generally Accepted Accounting Principles] basis were the highest Novell has achieved for several years." "We enter fiscal year 2006 better prepared to take advantage of our growth opportunities in Linux and identity," Messman said. In particular, Novell expects to continue to win in the enterprise space where Novells new president and COO, Ron Hovsepian, claims that it has a 75 percent win rate for enterprise deployments of mission critical networks. Click here to read more about Hovsepian taking the reins at Novell. Hovsepian credits this to Novell "knowing how to make Linux work in a complex network" and its focus on its mid-tier and hardware partners. As for the competition, Hovsepian said he "respects Red Hat." As for Sun Microsystems Inc., though, while Sun and its Solaris announcements has given Suns customer another option, we dont see how it will work out in the [open-source] community." "Sun is too late; its lost lot of the Linux community in last two years," Hovsepian said. Messman added: "How open is really Sun really going to be? Can they recapture Linux developers? I dont think they can." One weak spot for the company has been the performance of its consulting arm, Celerant. The former Cambridge Technology Partners is continuing to have trouble and its revenue has continued to go down. As Novell had announced earlier, under pressure from some stockholders, that it is not exploring the possibilities of selling Celerant. Those same stockholders, led by Blum Capital Partners LP investment firm, also were successful in getting Novell to agree to buy back some of its stock in September. However, Novell has not repurchased any of its common stock to date because it has been continuously subject to self-imposed trading blackouts since the share repurchase program was announced. Once Novell no longer has to deal with those blackouts, it expects the $200 million buyback to go quickly. Looking ahead, Novell expects net revenue for the first fiscal quarter 2006 to be between $260 million and $270 million. The recent staff reductions and other reorganization issues are expected to cost Novell from $40 million to $50 million in 2006. However, by 2008 Novell expects to have a very healthy operating margin of between 12 percent and 15 percent. Check out eWEEK.coms for the latest open-source news, reviews and analysis.

Steven J. Vaughan-Nichols is editor at large for Ziff Davis Enterprise. Prior to becoming a technology journalist, Vaughan-Nichols worked at NASA and the Department of Defense on numerous major technological projects. Since then, he's focused on covering the technology and business issues that make a real difference to the people in the industry.

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