Novell Turns a Profit on Reduced Net Income

Novell's net drops, but Linux continues to grow and the company still manages a profit by reducing costs. (Linux-Watch)

This year, Linux distributor Novell has replaced its CEO, battled SCO, concluded a major partnership with arch-enemy Microsoft, and suffered a storm of outrage from angered open-source fans over this deal. Still, the company managed to eek out a small profit.

Novell released financial results for its fourth fiscal quarter and fiscal year ended Oct. 31, 2006. However, these results remain preliminary, because Novell, like many other companies, has begun a voluntary review of its historical stock option practices and related potential accounting impact.

Novells audit is continuing to go on. The company expects to file its Form 10-Q report for the third fiscal quarter ended July 31, 2006, and Form 10-K report for the full 2006 fiscal year when the review is concluded.

The good news about the preliminary results is that the companys Linux revenue grew 26 percent year-over-year. In addition, identity and access management revenue grew 30 percent year-over-year. New CEO Ronald Hovsepian said in June when he took over, "Going forward, we will maintain a sharp focus on meeting customer demand and delivering value through Linux-based, enterprisewide solutions and identity and resource management products," and it would seem that Novell is delivering on its plans.

For the fourth fiscal quarter 2006, Novell reported net revenue of $245 million, compared with net revenue of $288 million for the fourth fiscal quarter of 2005. The net income available to common stockholders from continuing operations in the fourth fiscal quarter 2006 was $25 million, or six cents per diluted common share. This compares to a loss of $6 million, or two cents loss per diluted common share, for the fourth fiscal quarter 2005.

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