Novell CEO steps aside for Cambridge Tech boss

SAN FRANCISCO: Business software maker Novell Inc.'s chief executive officer,

Eric Schmidt, will step aside to be replaced by the CEO of Internet consultant

Cambridge Technology Partners Inc., which Novell said on Monday it would acquire

through a stock swap valued at around $255 million.

Cambridge Technology president and chief executive officer, Jack Messman,

will take over the helm at Provo, Utah-based Novell from Schmidt, who will

remain chairman and chief strategist. Novell shares were down 12 per cent, or

23/32, to $5-3/32 in Tuesday midday trading on Nasdaq after the announcement,

while Cambridge shares were up 3 per cent, or 3/32, to $3-3/16.

With the acquisition of Cambridge, Novell now expects fiscal 2001 revenue to

total $1.2 billion, with earnings per share of 18 cents, according to a

spokesman. For 2002, Novell sees revenues between $1.6 billion and $1.7 billion

and earnings per share of 50 cents. Schmidt, a respected Silicon Valley veteran,

leaves Novell after a four-year tenure that began with much fanfare in 1997.

One of the architects of the Java programming language at Sun Microsystems

Inc., Schmidt joined Novell promising to transform the company, at the time the

leading operating system vendor for corporate networks with its NetWare

operating system, into an Internet-focused company.

Novell has continued to see its operating system market share eroded by

challengers such as Microsoft Corp.'s Windows NT, now Windows 2000, and Linux in

recent years. Meanwhile, its transformation into a powerhouse provider of

Internet software and services for large corporations has run into repeated

roadblocks.

Both companies have seen their stock prices skid in recent months. Novell is

down about 84 per cent off its 52-week high of $34-9/16, while Cambridge

Technology has seen its share price fall 94 per cent from its peak in July 1998.

Novell will exchange 0.668 shares of its common stock for every outstanding

share of Cambridge Technology. The acquisition, initially valued at $266 million

based on Novell's Friday closing price, was worth $255 million based on Monday's

closing price.

The acquisition, which has already been approved by the boards of directors

of both companies, will see Cambridge Technology becoming a wholly owned

subsidiary of Novell.

(C) Reuters Limited 2001.