Novell returns to profit, despite sluggish revenues

24 Feb 2004

Network software vendor Novell, which has firmly pinned its colours to the ever rising Linux mast, has reported an increase in profitability in its first quarter results, compared with a loss a year ago. As well as this company revenues increased 2.7pc to US$267.1m, compared with US$260m this time last year.

Net income in the first fiscal quarter 2004 was US$10m, or US$0.03 per share. This compared to a net loss of US$12m, or $0.03 loss per share, for the first fiscal quarter 2003.

Novell, which employs 125 people at its Dublin offices, saw its revenue increase to US$267.1m from US$260m a year ago. Revenue from maintenance and services rose 6.7pc to US$212.3m, while revenue for new software licenses declined 10pc to US$54.8m.

On the balance sheet, cash and short-term investments were US$605m at the end of the first fiscal quarter 2004, compared with US$651m a year ago. This decline in cash and short-term investments is primarily attributable to the cash payment to SUSE Linux shareholders in connection with the previously announced acquisition, offset by positive cash flow, including cash flow from operations during the first fiscal quarter 2004 of US$31m.

“I am encouraged by our performance during the quarter in what remains a challenging IT business environment,” said Jack Messman, Novell chairman, president and chief executive officer. “We showed steady progress in positioning Novell for high growth opportunities, including the Linux market, while completing a significant acquisition and continuing to work through a major reorganization of our North American operations. We are now focused on execution, and are moving quickly to deliver enterprise-class network services for mixed environments, including Linux.”

Last month, Novell’s Irish operation secured a major productivity and cost-saving infrastructure deal with Craigavon & Banbridge Health and Social Services (HSS) Trust that will see Novell’s technology deployed to enable five IT managers to manage some 750 networked PCs spread out over 30 sites.

By John Kennedy