DJ Novell 2Q Sees Stronger Growth; Co To Unveil Caching Pdt
By MARK BOSLET
Dow Jones Newswires
(This story was originally published Tuesday.)
PALO ALTO, Calif. -- Novell Inc. (NOVL) saw accelerating growth in its second
quarter as the company's software directory helped propel sales of its network
operating system, NetWare 5.
Sales of NetWare 5, which includes the directory, rose 68% from the first quarter to
$91 million, and directory-enabled server software - NetWare version 4 and 5 - was up
41% from last year, the company said.
Overall, revenue increased 20% to $316 million from $262 million in the second quarter
of 1998, the strongest growth the company has experienced in more than a year.
Growth, on a percentage basis, was higher in the third quarter of 1998 but only because
an inventory adjustment in the third quarter of 1997 sharply reduced revenue then.
It's obvious sales are being driven by the directory, called Network Directory Services,
or NDS, said Joel Achramowicz, an analyst at Preferred Capital Markets.
From a customer's perspective, a network directory enables technology managers to
keep track of computer users and assign them differing levels of clearance and access. It
also permits users to sign on from different computers and retain the same network
profile.
Novell, of Provo, Ut., has a head start in the market over Microsoft Corp. (MSFT),
which plans to ship its directory with Windows 2000 late this year. Analysts say they
are not sure how that lead will hold up once Microsoft gets its product into the market.
But the stronger second-quarter growth could prove a milestone for Novell, which is
trying to engineer a turnaround. A maturing market for earlier versions of NetWare led
to a sales slump at the company.
"I just get the sense of more confidence in the firm in general," said Paul Dravis, an
analyst at Banc of America Securities.
Novell said net income for the second quarter was $39 million and earnings were 11
cents a diluted share. That compares with $19 million and 5 cents a year ago. Analysts
had expected 10 cents.
Novell said sales from Europe rose 35% from last year and increased 23% from
Southeast Asia. Japanese sales were flat from last year.
In the U.S., sales rose only 13%. The company said it no longer receives royalties from
its Tuxedo product, which it sold to BEA Systems Inc. (BEAS).
The gross margin also fell, but the company expects it to recover, Achramowicz said.
Novell expects to release in June its Internet caching software, Internet
Caching System, which is to be included on computers from Dell Computer
Corp. (DELL) and Compaq Computer Corp. (CPQ). Achramowicz expects
between $4 million and $10 million in revenue in the third quarter and $40 million to $50
million by the end of the year.
The company also plans to ship new products by the end of fiscal 2000 that address
single network sign-on, policy management, quality of network services and electronic
commerce.
It is good to see Novell spell out its new product direction better than in the past, Dravis
said.
- Mark Boslet; (650) 496-1366 |
