Novell profits exceed forecasts on strong demand
By Duncan Martell
PALO ALTO, Calif., Nov 24 (Reuters) - Novell Inc. on Tuesday posted fiscal fourth-quarter profits that topped forecasts, marking the fifth consecutive quarter the maker of network management software has reported improved results.
The company said net income for the quarter ended Oct. 31 rose to $42 million, or 12 cents a share, from $7.17 million, or 2 cents, in the year-ago period. Analysts were expecting 9 cents a share, according to research firm First Call Corp.
Sales rose 11 percent to $298 million from $269 million.
Little more than a year ago, many wondered whether Novell would survive a competitive onslaught from Microsoft Corp. and its Windows NT operating system, whose share of the operating system market in 1997 surpassed that of Novell's NetWare.
Now, investor and customer faith is returning as the Provo, Utah-based company saw strong demand in the most recent quarter across almost all product lines. Recent announcements with Lucent Technologies Inc., Nortel Networks and Cisco Systems Inc. to use Novell's so-called directory software to help manage data networking equipment also has boosted confidence.
''Right across the board, it was a very good quarter,'' said Stephen Dube, an analyst at Wasserstein Perella Securities in New York. ''They did extremely well.''
Much of the credit, analysts said, goes to Eric Schmidt, the company's chief executive, who came to Novell a little more than a year ago from Sun Microsystems Inc.
Novell found that its directory services software, a technology it calls NDS, was particularly skillful at managing data networking gear such as routers, switches and hubs.
Directory services are basically a database containing information on computer users, desktop and server computer systems, applications and devices such as printers. As companies become more networked and office gizmos proliferate, more sophisticated ways are needed to manage them.
In an interview, Schmidt said Novell was seeing good demand for NetWare 5.0, the latest incarnation of the venerable operating system that came out in mid-September.
''Things seem to be going quite well,'' Schmidt said. ''Revenue was quite strong for new products; it was strong across the board.''
Fourth quarter revenues were up solidly in the United States, with a moderate rise in Europe, Middle East, and Africa, but there was a big drop in the Asia-Pacific region.
''Business is good everywhere,'' Schmidt said, adding that ''Asia has largely stabilized.''
For all of fiscal 1998, revenue was $1.08 billion, compared with $1.0 billion in fiscal 1997. Net income for the year was $102 million, or 29 cents, compared with a loss of $78 million, or 22 cents, for the prior year. The year-ago figures include a restructuring charge of 10 cents a share.
Novell reported results after the close of U.S. trading. The stock, which has nearly tripled in the last 12 months, fell 62.5 cents to $17.38 on Nasdaq, near its year-high of $18.
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