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Novell Q3 profit, revenue down

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CIOL Bureau
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Reed Stevenson

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SEATTLE: Novell Inc., which provides networking software and update services for Linux, reported a 91 percent drop in quarterly profit on Thursday as revenue fell slightly.

Novell's shares fell 2.6 per cent in after-hours trade after the company reported a profit of $2 million, or nil per share, in the third fiscal quarter ended July 31, compared with a profit of $24 million, or 6 cents per share, in the year-ago period, which included a one-time gain on a legal settlement.

Revenue fell to $290 million from $305 million.

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Novell, a longtime competitor of Microsoft Corp., is expanding in the Linux update and support services market along with Red Hat Inc. to tap into the growth of Linux.

Waltham, Massachusetts-based Novell is counting on its Linux software business to replace its older networking software business.

"We're trying to replace the core business that has been declining," Novell Chief Financial Officer Joe Tibbetts said, adding that Linux-related revenue totaled $44 million in the latest quarter.

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Excluding restructuring charges and a one-time gain, Novell said it earned $14 million, or 3 cents per share, the same as an adjusted profit of $14 million, or 3 cents per share, from a year earlier, which excluded the impact of a $19 million gain from a legal settlement.

Analysts, on average, had expected Novell to post a profit, excluding charges and gains, of 3 cents per share, according to forecasts compiled by Reuters Estimates.

Novell also said it would announce more cost reduction plans and take a charge in the fourth quarter.

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"While we were profitable this quarter, we still have improvements to make in our business which will lead to cost reductions," Novell Chief Executive Jack Messman said in a statement.

Shares of Novell slipped in after-hours trade to $6.01 from their Nasdaq close of $6.17.

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