and we are history:
April 23, 1997,
Novell 2Q Projections "Brutal"
By Barbara Darrow & Steven Burke
PROVO, Utah -- New Novell Inc. CEO Eric Schmidt is finding out just how difficult it is
going to be to turn around the network operating system vendor. With sales of software
to small and medium businesses lower than expected, Novell warned Wall Street analysts
that it will not meet expectations for its second fiscal quarter ended April 30.
The news sent Novell shares reeling Wednesday, falling 1 29/32 to 7 1/8, a 21 percent
drop, in early afternoon trading.
Novell said it expects to post sales in the quarter of $300 to $335 million, as much as a
20 percent drop from the preceding quarter when the company reported sales of $375
million. Novell said it expects to post a slight profit for the quarter.
Analysts had expected that Novell would post sales higher than $375 million . The Wall
Street consensus earnings per share was about 17 cents. Novell was providing no new
guidance on how earnings will be affected by the shortfall.
Rick Sherlund, a partner with Goldman Sachs, New York, called the numbers "brutal."
"It's not pretty," he said. "The Street anticipated that revenues would be in the $375
million plus range. But then again, we've seen worse."
"It doesn't sound good," said another analyst, who had just learned of the shortfall.
Novell's executive committee was meeting to decide what steps to take in the wake of
the shortfall. As of late in the day, Schmidt, who took the helm one month ago, had not
met with Novell employees or spoke with analysts.
In a prepared statement, Schmidt said that Novell is "going to do a thorough business
review" in light of the lower than expected sales.
"We will make the changes necessary to better manage and control Novell's business,
including setting appropriate levels for operating expenses and product inventories in the
distribution channel," he said. "I intend to make certain that Novell's resources and
priorities are tuned to fully revitalize this company."
Schmidt promised to strengthen Novell's business with new Internet products. "The
product path we are on is replacing Novell's older business with an Internet future that I
came to help create," he said.
Novell said the sales shortfall affected boxed software sold through distributors and
OEMs. Sales of the company's software via its multi-product license programs continue
strong, officials said, reflecting strength in the large network enterprise market.
Novell expects to post final results for the second fiscal quarter on May 28. Novell
posted earnings of $51 million (15 cents per share) on sales of $375 million in its first
fiscal quarter ended Jan. 31.
Novell made the announcement after the market close. Novell shares closed down 9
cents per share to $9 on Tuesday. |
