Novell Restructuring Plan Calls For 1,400 Job CutsNovell Restructuring Plan Calls For 1,400 Job Cuts

Novell's reinvention of itself as a more services-intensive company is not going to be painless, as demonstrated by the restructuring plan it released Thursday. It calls for 1,400 job cuts by March. The 19% reduction in the workforce will leave the company with 6,000 employees.

Company execs cited several factors for the job cuts, including Novell's new focus on services and consolidating businesses after acquiring Cambridge Technology Partners for $266 million in stock in March as it began its push into consulting services.

Customers approve of Novell's overall direction, but want it to stay focused on its historically strongest areas--its NetWare network operating system and its Novell Directory Services software. "I'm not disappointed in where the company is headed, but they could tighten up and focus on what they do best," says longtime Novell customer Corey Warrington, network analyst at the Department of Consumer and Business Services for the state of Oregon.

Novell expects fourth-quarter revenue to total $306 million, but it will take $90 million in charges, including costs associated with its restructuring, the integration of Cambridge, and bad investments. Novell will release fourth-quarter financial results at the end of this month. The company believes the reorganization, which it hopes to complete by the end of its second quarter in March, will save $200 million in annual expenses.