Schmidt Steps Down

Novell acquires CTP, names Messman to top Novell post

For the second time in his career, Jack Messman will head network software developer Novell Inc.—a result of Novells surprise acquisition of Cambridge Technology Partners Inc. and a top-level shake-up announced last week.

As part of the acquisition, Messman assumes Novells CEO spot, taking the job of Eric Schmidt, who will remain in the chairmans role and who adds chief strategist to his list of duties. Messman is currently CEO of CTP, which is being acquired by Novell for $266 million.

Despite the confusion the deal creates around its core products, Novell continues to bolster its networking software. According to officials, Novell is set to include new printing capabilities, and disk pooling and storage technologies in NetWare 6.0, due in the third quarter.

"They have no strategy, no marketing. But there are a couple of key products like ZENworks," said one large-enterprise user of Novell products, who asked not to be named. "Wed die on the vine if that product wasnt around. I deployed 894 apps in my environment via that product for our business unit," added the user, who said he doesnt understand why "Eric is being placed in another role."

Messman has had the CEO job at the Provo, Utah, vendor once before—back in 1982—when he helped Novells then lead investor, Safeguard Scientifics Inc., shore up its investment in tiny Novell Data Systems Inc. Messman, whos been on Novells board of directors since those days, said the idea for the new management role was solely Schmidts.

"It was his idea that hed like to focus on the strategy and technology, but he felt he wasnt very good at implementing things," Messman said. "He wanted someone with my skills to do it."

Novells long struggle to transform itself from an ailing packaged software provider into an Internet services company will get a direct revenue boost on the services side with the acquisition, which is expected to be completed within the next three months, officials said.

"This advances Novells transition to becoming a Net services company," said Schmidt, who added that the acquisition fulfills a pledge Novell leadership made two years ago to generate about a third of its revenues from services. "We needed to gain the right skill set to provide consulting services around our OneNet vision and services software."

Novell had grown its consulting organization to include 350 consultants focused on e-directory and network services, and the group contributes 5 percent of Novells revenue. But organic growth was taking too long. "We recently came to the conclusion that it was going slower than we wanted," Messman said.

CTP, which will become a Novell subsidiary, adds 2,800 consultants to Novells work force.

"Now its my job to get it rolling and implemented and into solutions," Messman said. "Theres a major trend in the market where products and services are converging into solutions. This areas gotten so complex clients dont care about the products—they care about the solutions."

Novells transformation into a Net services company, and its efforts to get back on a growth track, could still be a tough road. Both Novell and CTP have reported a string of bad quarters, with CTP earlier this month lowering its revenue expectations for the first quarter by $5 million, down to $120 million.

With a weakening economy and slowed IT spending, Novell is not likely to see a growth spurt soon.

"Its a bad time to be pushing into consulting—thats the first area cutbacks happen in in bad times," said Neil MacDonald, an analyst at Gartner Group Inc., in Stamford, Conn. "We expect there will be more layoffs as Novell absorbs [CTP], and we expect more quarters of disappointing earnings."