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Novell's health improves
By Ben Heskett and Dawn Yoshitake
November 26, 1996, 6:15 p.m. PT
Novell (NOVL) appears to have
regained some measure of financial equilibrium,
meeting analysts' expectations today by reporting
flat earnings for the fourth quarter and a 20
percent revenue dip.
The company is still fighting to pump up its
financials to its year-ago levels. It also remains a
company in transition with no new CEO in place
yet to follow Robert Frankenberg, who left at the
end of August.
But the current brain trust's strategy of refocusing
the company by evolving its NetWare network
operating system into IntranetWare, a bundling of
Internet tools with the base platform, may be
working. Company officials reported 38 percent
growth in NetWare and IntranetWare revenue, 24
percent growth in GroupWise messaging product
revenue, and 18 percent growth in ManageWise
network management software revenue in the
fourth quarter over the third quarter.
The company also pleased users and market
analysts by announcing plans to rewrite Novell
Directory Services, generally regarded as the
company's primary strategic advantage, to run on
Microsoft Windows NT and a variety of Unix
platforms. The company is expected to announce
any day an additional version of NDS for IBM's
AIX Unix platform.
However, it may take a couple more quarters to
prove definitively that the plan is working. The
networking software vendor reported revenue of
$384 million for the quarter ending October 26,
down from $481 million a year ago. Net profits
were $59 million for the quarter, the same level
they were a year ago.
The $103-million revenue drop in the fourth
quarter may also reflect the recent decision to sell
off the personal productivity applications unit that
carried the PerfectOffice suite and the high-end
UnixWare operating system.
For the year's end, Novell revenues dropped 30
percent over the previous year to $1.4 billion. Net
profits plummeted 63 percent to $126 million for
the year. Earnings per share for fiscal 1996 were
35 cents, compared with 90 cents for fiscal 1995.
"Our actions continue to be directed at energizing
the company for profitable revenue growth,"
Novell chairman John Young said in a statement.
Young and Joe Marengi, the current president, are
leading the company while it searches for a new
CEO.
The quarterly results are still an improvement
compared with those for the second quarter, when
the company posted a huge loss that it attributed
to leftover inventory on reseller shelves and a
change in its distribution policy. The second
quarter had some analysts wondering about the
continued financial viability of the company, but
Novell seems to have calmed Wall Street a bit.
Novell's earnings were in line with Wall Street
analysts' estimates, according to First Call.
"[It] was pretty much in line with estimates. It was
about a penny below our expectations," said Chris
Galvin, an analyst at Hambrecht & Quist.
But Novell still has work to do to recoup its
former prominence in the industry. "Generally,
they're still challenged by the rapid emergence of
Windows NT and the proliferation of systems built
for the Internet, rather than proprietary systems
like Novell's," said Galvin.
Sun shines on Novell
Novell to license key
NetWare strength
Novell plans flatter
management
Novell draws IntranetWare
roadmap
Novell tries to stop the
bleeding
Novell ripe for a takeover?
Frankenberg to leave
Novell
Novell stakes for success
Novell battles for intranets
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