Novell Takes Loss, Cuts 600 Jobs

Novell cuts 600 jobs after posting a loss for its fourth consecutive quarter.

Novell Inc. announced Thursday that it has cut 600 jobs in an effort to save more money after posting a loss for the fourth straight quarter.

The Provo, Utah-based software and services company took a loss of $12.4 million in its fiscal third quarter, ended July 31, after posting income of $9.5 million in the same period last year. Novell has lost money for four straight quarters since last years fiscal third quarter. The company did enjoy a slight revenue increase though, from $282.3 million to $282.8 million year-to-year.

Software license revenue fell however from $82.9 million in the prior fiscal years third quarter to $69.3 million this year.

Most of the job reductions have already been completed, company officials said, bringing Novells total workforce down to 5,700 employees. The cuts are expected to save the company $75 million, with the cost-reduction benefit to be gained in the first fiscal quarter of 2004, which will end Jan. 31, and lower Novells overall non-salary operating expenses by about $25 million on an annualized basis.

In a statement, Novell chairman, president and CEO Jack Messman said the company was encouraged by its third-quarter results.

"We took significant steps to improve Novells business performance through cost-cutting measures intended to enhance our profitability beginning in our current fourth quarter," Messman said.

Messman also pledged continued support for the companys NetWare product line.

"Novell is not diminishing support for its NetWare product line," he said. "We are adding Linux. Novell plans to deliver a full range of solutions to help customers maximize the value of investments in Linux and open source."

Novell acquired Linux software company Ximian Inc. on Aug. 4, just days after the quarter closed.

Identity management and secure Web services software—Novells Nsure and exteNd brands—were strong performers for the company in the quarter, growing 34 percent year-over-year to total $26 million. Cross-platform services software, marketed under the Nterprise brand, declined six percent year-over-year to $144 million.

On the services side, Celerant management consulting revenue was up 16 percent year-over-year to $37 million. Revenue from Ngage services, which includes IT consulting and other customer services, declined 3 percent year-over-year to $76 million.