Hi Jim - Notice the company's explaination for their revenue shortfall. Specifically revenue's from site licenses were down $9 million. Revenue from support and education was also down which I believe you watch as a "leading" indicator. Not a very good trend...
I still do not trust CFO Tolonen. I sure hope he does not authorize padding the license revenue results. IFMX got into trouble with this type of accounting and had to restate their 1997 revenues.
Finally did you notice that CEO Schmidt moved his turnaround date ahead a bit from April 1998 ....."Schmidt vowed the company "will become the intranet/Internet leader by the summer of 1998." .
This company must focus on a Service Revenue model, only keep the largest VAR's and create new growth around network services.
EKS
August 24, 1997
Novell CEO Touts New Products
(08/22/97; 1:00 p.m. EDT)
By Stuart Glascock, Computer Reseller News
Moments after spinning out another lower-than-expected quarterly earnings report, Novell executives pronounced confidently that new products -- NDS for NT, Border Manager, GroupWise 5.2, and the next revision of IntranetWare -- will spark a turnaround.
On a conference call with analysts, Novell chief executive Eric Schmidt pinned the struggling networking company's future on a series of Internet/intranet products to be released within six months.
A somber-sounding Schmidt said that Novell Directory Services for Windows NT would be available in October. NDS for NT is perhaps Novell's greatest shot at recapturing some of the market share that Microsoft's widely popular Windows NT has taken.
"Novell is the undisputed leader in directories," Schmidt said. "We are the only company that is applying directory strategy to every aspect of the network from routers to the operating system."
Novell already has bundling agreements for NDS with Sun, IBM, Hewlett-Packard, SCO, and Fujitsu. A directory is a central repository for all systems and applications that VARs use when configuring systems. Novell has held the lead with NDS, but the release of Active Directory in Microsoft's Windows NT 5.0, due in 1998, is expected to heighten the competition.
Border Manager is a suite of Internet access products that includes firewall, proxy caching, virtual private networking, and content screening. Novell will announce the general availability of the product next week, Schmidt said.
Reportedly, the announcement is planned at the Java Internet Business Expo. "Border Manager is coming off of an incredibly successful beta test period," Schmidt said. "Customers managing Websites have called it magic for how it impacts the cost-effectiveness of security and administration."
In another example, he noted GroupWise 5.2 would be delivered in September, and he touted its new Internet capabilities.
Schmidt said the company will do everything possible to migrate companies to its IP native, networking platform, code-named Moab and due out in 1998. All this optimism comes in the face of a third quarter net loss of $122 million, or 35 cents per share, on sales of only $90 million.
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***Novell officials noted several reasons for the quarter's poor financial performance. The company allowed $26 million in product returns and exchanges by distributors. OEM revenue was $25 million lower than expected, they said. Revenue from licenses declined by $9 million. Revenue from support and education was also down. ***
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The company also took a restructuring charge of $55 million, primarily associated with a 1,000-employee reduction.
"Five months ago, when I joined Novell, the company had unclear management priorities, a work force that was out of alignment with the realities of our business model, an indirect channel with too much product and not the right mix of product," said Schmidt.
"Many of our customers lacked confidence in the company's future to make future investments. I'm pleased to report that during the third quarter we took decisive actions in all of these areas and embarked on a pragmatic recovery strategy, based on sustaining revenue from the core platform and creating a new growth around network services." Schmidt vowed the company "will become the intranet/Internet leader by the summer of 1998."
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Still long on 1/2 my original position but looking for an exit point to sell the balance of my holdings. Perhaps next year I will re-establish my long position as these "new revenue" streams begin to hit the income statement. Also CFO Tolonen must be replaced before this investor sinks more dollars into this company.
EKS (seems like I am always spending good money after bad and continue to hear how good things are and 'they will get better'...I want results and revenue growth.) |
