Novell turns a profit but posts lower revenues

7 Dec 2006

Novell has announced preliminary financial results for its fourth quarter and full fiscal year, showing a turnaround in profitability, albeit on the back of lower revenues.

The software company had posted a loss of US$6m for the fourth quarter last year but turned this into a US$25m profit in the space of the last 12 months. Over the same period, revenues declined to US$245m, down from US$288m for the fourth fiscal quarter 2005. For the full fiscal year 2006, Novell reported revenue of US$967m and net profits of US$21m.

During the final quarter of its 2006 financial year, revenue from Linux products rose by 32pc year-on-year to US$13m. Identity and access management was US$24m, up 3pc year-on-year. The news wasn’t so good for the company’s established Open Enterprise Server and NetWare products, with a drop in revenue of 25pc from the same period a year ago.

Ron Hovsepian, president and CEO of Novell, said he was pleased with the progress made in the categories of Linux and identity management during the year. He added that the deal on open source technology that Novell recently struck with Microsoft would give “significant momentum” to the company’s Linux business.

“With these proof points established and with the initiatives we have begun to improve our sales model, development processes and back office efficiencies, we feel confident that we are on the right path to put Novell on target for sustained profitability in the future,” he said.

To that end, Novell management said that it expects net revenue for the full fiscal year 2007 to be between US$945m and US$975m.

By Gordon Smith