NOVL beefs up its caching division:
dailynews.yahoo.com
Friday February 2 5:34 PM ET
Novell to Create New Content Networking
Company
By Eric Lai
SAN FRANCISCO (Reuters) - Novell Inc. (NasdaqNM:NOVL - news)
said on Friday it is carving out its existing caching and content networking
division and creating a new company called Volera, and that
telecommunications equipment giant Nortel Networks Inc. (NYSE:NT -
news) and business consultancy Accenture will take minority stakes.
Provo, Utah-based Novell said the new operating company will sell products
and services that help accelerate the distribution of multimedia content, such as video clips and music, on the
Internet.
The agreements calls for the three firms to provide Volera with more than $80 million in cash and consulting
services.
Novell will retain a majority interest in Volera. It has no current plans to sell shares to the public, though an
initial public offering in the long-term has already been approved by Novell's board.
Investors were mostly indifferent, as the stock closed down 13/32 to $8-5/16 on lower-than-average volume
of more than 2.1 million shares. Novell shares have slipped more than 80 percent since last February.
Volera's products and staff will come mostly out of Novell's Net Content Services division, which would have
brought in about $30 million in sales for this fiscal year, said Chief Financial Officer, Dennis Raney, in a
conference call. The company is also setting aside $60 million this year to create Volera.
'Why Not Sell It Ourselves'
Mostly-known for its networking operating system, NetWare, for businesses, Novell admitted it had faced
problems in attacking a market comprised mostly of Internet and telecommunications service providers.
``Why not sell it ourselves? That was my initial thought, but Novell has never had the channels, partnerships and
distribution that a Nortel has had,'' said Eric Schmidt, chairman and chief executive of Novell. ``We don't have
the brand or the cachet. So for both perception reasons, which became reality, and business reasons, we
frankly didn't have a choice.''
Schmidt, who will serve as chairman of the privately-held Volera, emphasized that Novell had no similar plans
with any of its other business units.
Volera's products and services are aimed at both service providers as well as creators of streaming media
content, like digital animation studios.
They will compete with companies like Cacheflow Inc. (NasdaqNM:CFLO - news), Inktomi Corp.
(NasdaqNM:INKT - news), and Network Appliance Inc. (NasdaqNM:NTAP - news), said Simon Khalaf,
president of Volera.
Nortel will sell Volera caching software as part of a lower-end, consumer-oriented offering.
``We will have strong products and, most important for any startup, an already-established distribution
network,'' Khalaf said. ``We believe strongly that between ourselves and Nortel, we're way ahead of the
competition.'' |
