NOVL 52 week high @20 3/4 until it closed yesterday @20 7/8...
revenue streams below show solid growth in high margin areas:
NOVELL INC (NASDAQ: NOVL)
News February 25, 17:15 Eastern Time
And Earnings of $0.08 Per Share
PROVO, Utah, Feb. 25 /PRNewswire/ -- Novell, Inc. (Nasdaq: NOVL) today reported revenue of $286
million for its first fiscal quarter ended January 31, 1999, a 13 percent increase over the $252 million
recorded in the first quarter of fiscal 1998. Net income was $29 million in the quarter, up from $14 million
in the prior year. Earnings on a diluted basis were $0.08 per share, compared with $0.04 in the
year-earlier period.
"The tremendous initial response to NetWare 5 in our first quarter is being amplified by new
directory-related products," said Dr. Eric Schmidt, Novell chairman and CEO. "From network caching to
central management of NT workstations, Novell Directory Services is opening up new product
opportunities for the company. Looking forward, the stage is set for Novell and its partners to build
innovative services for a rapidly growing directory market."
The three segments of Novell's business that are directory-related accounted for 88 percent of total
revenue in the quarter, and grew 27 percent year-over-year. Revenue from directory-enabled NetWare
servers totaled $146 million, up 16 percent from the first quarter of 1998. Network applications comprising
GroupWise collaboration software, ManageWise and Z.E.N.works management software, increased 50
percent from the prior year to $53 million. Infrastructure products that are directory-enabled contributed
$15 million, up 68 percent from the year-earlier period, fueled by strong growth from BorderManager and
NDS for NT. Service, training and consulting revenues were up 31 percent to $37 million.
Older pre-directory products represented the remaining 12 percent of Novell's revenue. These include
NetWare 3, TCP/IP connectivity and UNIX related royalties. Collectively, they declined 35 percent
year-over-year to $35 million.
On a geographic basis, revenue was $156 million in the United States, up 9 percent year-over-year. In the
Europe, Middle East, and Africa region, revenue increased 31 percent to $94 million, as an increasing
number of large organizations moved to NDS in preparing for Euro-driven market opportunities and a
post-2000 network infrastructure. Revenue of $22 million from Asia Pacific was approximately even with
the year-earlier quarter, and the Americas region, outside the U.S., was down slightly at $14 million.
Multi-product corporate and channel license programs grew 47 percent over the year earlier quarter, to
$148 million, driven by increasing deployments of Novell Directory Service and new directory-enabled
applications such as BorderManager and Z.E.N.works. Novell experienced especially strong
year-over-year growth from sales of Corporate License Agreements (CLA) and Value License Agreements
(VLA) by computer resellers and systems integrators. The company believes the strength of these
programs reflects growing channel acceptance of its new products and increasing directory deployments
by customers with mid-size as well as large networks.
On the balance sheet, cash and short-term investments were $1.015 billion at the end of the first fiscal
quarter, compared with $1.007 billion at October 1998 fiscal year-end. Net cash from operations
contributed $83 million in the quarter. Days sales outstanding of trade receivables declined to 66 days,
down from 75 days at the end of fiscal 1998.
During the quarter the company spent $77 million to repurchase 5 million shares of Novell common stock.
On June 5, 1998, Novell's board of directors authorized the company to repurchase up to 10 percent, or
approximately 35 million shares, of Novell common stock over twelve months. To date, the company has
spent $322 million to purchase and retire 26 million shares of common stock.
Business Outlook
Novell's business objective, over the longer-term, is to grow its
revenue as deployments of Novell Directory Services (NDS) in business
networks increase the market potential for directory-enabled
applications. In addition to having moved to open Internet standards
with NetWare 5, Novell is also bringing to market new directory-enabled
applications that will ultimately span from systems management to
commerce services on the network.
The company believes it has an opportunity to enter software product categories where it has not
historically competed. In addition the company is actively pursuing areas of the Internet market that are
still in an embryonic stage of development. Examples of new directory-enabled applications include
BorderManager for security and caching, and NDS for NT for centralized management of NT workstations.
Novell anticipates bringing more new products to market in 1999 than it did in 1998.
Novell plans to expand the value of directory-based management and control of network applications and
devices by supporting the integration of these varied resources with NDS. Recent examples include NDS
for Solaris, a new Novell product that integrates Sun Microsystems Solaris systems with the NDS
network platform. Tivoli Systems has announced the integration of Tivoli Enterprise, User Administration
and Inventory software with NDS. IBM has announced the availability of Novell Network Services for
OS/390, to take NDS to their mainframe environment. Cisco, Lucent Technologies, and Nortel have
announced intentions to integrate NDS with their products for policy based management of switches and
routers and for IP address management.
About Novell
Novell, Inc. is the leading provider of network software enabled
by directory services. Novell Internet solutions make networks more
manageable and secure and reduce the total cost of ownership for
organizations of every kind and size. Novell's worldwide channel,
developer, education and technical support programs are the most
extensive in the network computing industry.
For information on Novell's complete range of products and services, contact Novell's Customer Response
Center at 888-321-4CRC (4272), or visit Novell's Web site at www.novell.com. Investors can obtain
financial and corporate information at Novell's investor relations Web site at www.novell.com/ir. Press
may access Novell announcements and company information on the World Wide Web at
www.novell.com/pressroom.
Forward looking statements in this release are made under the Safe Harbor Reform Act of 1996. These
statements are based on current expectations and actual results may differ materially due to risks,
uncertainties, and other factors. Additional information covering factors that could cause results to differ
materially from projected statements can be found in Novell's 10-K and 10-Q filings, as well as the annual
report.
Novell, Inc.
Consolidated Unaudited Condensed Balance Sheets
(In thousands)
ASSETS Jan 31, 1999 Oct 31, 1998
Current assets
Cash and short-term investments $1,015,422 $1,007,167
Receivables, net * 206,227 246,577
Inventories 2,737 3,562
Prepaid expenses 63,189 63,165
Deferred & refundable income taxes 79,839 95,343
Other current assets 39,514 19,886
Total current assets 1,406,928 1,435,700
Property, plant and equipment, net 341,172 346,196
Long-term investments 156,842 114,815
Other assets 25,729 27,401
Total assets $1,930,671 $1,924,112
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $73,644 $77,987
Accrued compensation 52,948 52,348
Accrued marketing liabilities 17,527 16,383
Other accrued liabilities 58,938 62,206
Income taxes payable 61,158 64,057
Deferred revenue 137,421 141,714
Total current liabilities 401,636 414,695
Minority interests 15,933 15,919
Shareholders' equity 1,513,102 1,493,498
Total liabilities and
shareholders' equity $1,930,671 $1,924,112
* Receivables, net include trade receivables less allowances. All other
non-trade receivables are included in Other current assets.
Novell, Inc.
Consolidated Unaudited Condensed Statements of Income
(In thousands, except per share data)
First Fiscal Quarter Ended
Jan 31, 1999 Jan 31, 1998
Net sales $285,806 $252,042
Cost of sales 64,120 57,087
Gross profit 221,686 194,955
Operating expenses
Sales and marketing 105,337 104,211
Product development 54,005 60,238
General and administrative 25,994 25,574
Total operating expenses 185,336 190,023
Income (loss) from operations 36,350 4,932
Other income, net 3,786 14,643
Income (loss) before taxes 40,136 19,575
Income taxes 11,238 5,481
Net income (loss) $28,898 $14,094
Weighted average shares:
Basic 337,441 351,031
Diluted 351,522 352,971
Net income (loss) per share:
Basic $0.09 $0.04
Diluted $0.08 $0.04
SOURCE Novell, Inc.
02/25/99 /CONTACT: Peter Troop,
408-967-8150, or peter_troop@novell.com, or Jonathan Cohen,
408-577-7268, or jcohen@novell.com, both of Novell, Inc./
/Company News On-Call: prnewswire.com or
fax, 800-758-5804, ext. 100266/
/Web site: novell.com (NOVL)
CO: Novell, Inc. ST: Utah IN: CPR SU: ERN
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