Novell's 2nd-Qtr Profits Double, Top Forecasts
By Duncan Martell
PALO ALTO, Calif. (Reuters) - Novell Inc.'s (Nasdaq:NOVL - news) second quarter profits doubled, paced by strong sales of new software to help manage computer networks.
The No. 2 maker of network management software said Tuesday its net income for the fiscal period ended April 30 rose to $38.7 million, or 11 cents a share, from $19.3 million, or 5 cents, a year ago. The results topped analyst expectations by a penny, according to First Call Corp.
Revenue rose 20 percent to $315.7 million from $262.3 million. Sales were strong overall, especially in the Asia-Pacific region, where revenues surged 23 percent to $26 million.
Revenue in Europe, the Middle East and Africa rose 35 percent to $105 million, paced by gains in the United Kingdom, Germany, France and the Netherlands.
U.S. sales increased 13 percent to $169 million, while in the Americas excluding the United States, revenue was up 14 percent at $16 million.
''It was really pleasing to see that our international business is running quite a bit faster than the U.S.,'' Dennis Raney, Novell's chief financial officer, said in an interview.
Under the leadership of Eric Schmidt, Novell has been charting a comeback over the last couple of years. The once-struggling company first stabilized revenues and now sales are brisk because companies need its software to manage increasingly complex computer networks.
Provo, Utah-based Novell is also benefiting from a delay of Active Directory, the competing offering from rival Microsoft Corp.
Novell's Novell Directory Services, or NDS, and related software is designed to work on a variety of computer platforms, company executives said.
''When Microsoft finally comes out, people will more broadly recognize that there's a significant difference between our solution and Active Directory,'' Raney said.
He added that 91 percent of Novell's revenue in the just- completed quarter came from so-called directory products, where sales jumped 35 percent from a year ago. The remaining 9 percent of Novell's revenue comes from older products that are gradually being phased out.
Novell shares closed down 25 cents at $23.75 on the Nasdaq amid a rout in technology stocks. The stock has more than doubled from a year-low of $9.50.
The one area of concern, Raney noted, was the so-called millennium bug, where computers may not correctly register the date change to 2000. Novell has factored into its plans some delayed purchasing because of the Year 2000 issue, but said that, so far, the impact is no worse than forecast.
''We still don't see any impact from Y2K that would derail us from our internal plans,'' Raney said.
For the six months ended April 30, Novell's earnings more than doubled to $67.6 million, or 20 cents a share, from $33.4 million, or 9 cents, a year ago. Revenue rose 17 percent to $601.5 million from $514.3 million.
''We are really becoming a growth company again and have clearly passed the turnaround phase,'' Raney said.
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