Novell beats estimate, to break-even in Q4

PROVO; (Utah): Networking software company Novell Inc. on Thursday reported

third-quarter pro-forma earnings that beat Wall Street estimates and said it

expects to break even in the fourth quarter, before certain items.

Citing weak economic conditions, the company said it expects fourth-quarter

revenues to post a slight sequential increase and land at $305 million to $315

million, which would result in a near break-even results, before restructuring

and other costs.

Earnings for the fiscal year are expected to be about 2 cents per share and 6

cents per share excluding results from its Cambridge Technology Partners

subsidiary, chief financial officer Ron Foster said during a conference call.

"It will take us into the second half of 2002 to return Novell to

growth," said Jack Messman, Novell's president and chief executive officer.

Messman, who took the helm at Novell last month, is overseeing a major

corporate shift following the company's July 10 purchase of services provider

Cambridge Technology Partners in a deal worth about $266 million. The firm is

hoping to make up for lower software and consulting sales by offering integrated

services, combining products and services, a model perfected by IBM Global

Services has done.

Despite a 6 per cent drop in revenue from the previous quarter, Novell was

able to beat expectations by cutting expenses from marketing, advertising,

travel and other areas, Foster told Reuters. The company expects to see $39

million in savings from merging Cambridge and Novell, according to Foster, who

also said the company posted $30 million in restructuring charges from layoffs

and closing facilities in the third quarter.

Excluding one-time charges of about $39 million, Novell posted pro forma

income of $13 million, or 4 cents per diluted share, to beat analysts' consensus

estimate for a break-even quarter, according to data compiled by Thomson

Financial/First Call.

Including charges, the company posted a net loss of $19.3 million, or 6 cents

a share, compared with last year's net profit of $8.6 million, or 3 cents per

share. Revenues for the quarter ended July 31 declined to $247 million versus

$270 million a year earlier. The most recent quarter included $20 million in

revenue from Cambridge Technology Partners.

The company - which did not break out year-over-year sales activity by

business - said its large network site-license business, declined 3 per cent

from the second quarter, to $167 million. Packaged software license sales for

smaller networks were down 9 per cent, to $33 million.

(C) Reuters Limited 2001.