Novell profit drops sharply

PALO ALTO: Novell Inc., a maker of computer network and directory management software, on Wednesday said quarterly earnings dropped more than fivefold - not quite as far as analysts had forecast - and announced plans to buy back up as much as $500 million of its stock.

For the fiscal third quarter ended July 31, Novell said net income fell to $8.57 million, or 3 cents a share, from $49.3 million, or 14 cents, in the comparable period a year earlier. Sales fell 17 percent to $270.0 million from $326.8 million.

Profit per share in the latest period were slightly ahead of the consensus forecast of 2 cents, according to a poll of analysts by First Call/Thomson Financial. The stock added 1/16 to close at 10-15/16 on the Nasdaq, before the results were announced late Wednesday afternoon.

Novell, which recently reorganized itself into three business units to streamline operations, has struggled because of falling sales to big distributors. In late May, the company blamed the slack results on a stumbling sales force. The grim news cut short what had been been a comeback for the once-struggling company, based in Provo, Utah.

The results "are pretty much what we had indicated," said Dennis Raney, Novell's chief financial officer, in an interview. "I think we are getting our arms around the problem and we know what the issues are and I think we're starting to execute on that issues."

(C) Reuters Limited 2000.