Novell Sinks Lower, But CEO Promises TurnaroundNovell Sinks Lower, But CEO Promises Turnaround

Novell posted disappointing second-quarter results Tuesday, pinning the blame on the Internet downturn and lower corporate spending. For the quarter, which ended April 30, Novell had a loss of $151 million, or 48 cents per share, on revenue of $241 million. In the same quarter last year, Novell lost $31 million, or 9 cents per share, on revenue of $302 million.

"We're obviously disappointed with the uneven results for our second fiscal quarter," Novell CEO Eric Schmidt said during a teleconference. Although it faces the same economic pressure other IT firms feel, Novell has the additional burden of rallying customers around its Internet-services strategy before it can turn itself around, Schmidt said.

In its second quarter, Novell took a writedown of $142 million in bad equity investments, a major contributor to the loss, according to the company. But Novell still expects to return to profitability by the end of the year, Schmidt said. Company execs say Novell will do this through job cuts and reduced travel, advertising, and recruiting expenses. Novell is expected to have cut 5% of its 5,200 full-time and contract workers by the end of this month.