Novell Reports Loss In 4QNovell Reports Loss In 4Q

Novell Thursday reported fourth-quarter revenue of $307.6 million, compared with $273.3 million in the same period a year ago. Nevertheless, the company still recorded a loss for the quarter ended Oct. 31 of $94.5 million, compared with the $35.0 million it lost in the year-ago quarter.

For the year, Novell earned revenue of $1.04 billion, down from $1.16 billion last year, and a loss of $272.9 million, down from a profit of $49.5 million the previous year.

Two weeks ago, Novell embarked on a restructuring in which it will cut its workforce by 19%, or 1,400 workers, leaving the company with 6,000 people. In announcing the restructuring, Novell said it expected fourth-quarter revenue of $306 million, although it predicted a net loss for the quarter because of charges related to the restructuring, its integration with Cambridge Technology Partners, which it acquired in March, and other factors.

Novell is in the midst of transforming itself from a vendor of network operating system and directory software into an Internet-savvy software and services company. But it hasn't managed to add revenue from new businesses as quickly as it's lost revenue in its more traditional strongholds.

Like many other organizations, the City of Oceanside, Calif., is a former Novell customer that replaced its Novell software with Microsoft NT. Oceanside made the move to NT several years ago and hasn't looked back, says Michael Sherwood, director of IT at the City of Oceanside.

For Sherwood, Novell's latest financial difficulties are just a continuation of what the city saw as a problem several years ago when it switched from Novell products to NT. "One of the problems was Novell's stability, and that was three years ago," Sherwood says.

The city has stuck with NT because of its integration with other Microsoft software, its ease of management, and the fact that there are a larger number of technicians with Microsoft training, Sherwood says. He adds, "I don't see anything from Novell leading me to believe that there's any reason to go with their products."