Novell to lay off 10 percent in restructuring

Novell will eliminate about 600 jobs, or more than 10 percent of its work force, as part of a restructuring.

Novell will eliminate about 600 jobs, or more than 10 percent of its workforce, as part of a restructuring in which the company will refocus on Linux and open-source opportunities as well as the identity and resource management markets.

The software vendor plans to complete the restructuring in the first quarter of its 2006 fiscal year, which will end Jan. 31, according to a company statement Wednesday. The restructuring will result in an estimated charge of US$30 million to US$35 million in the company's fiscal 2005 fourth quarter, which ended Oct. 31, but it will cut expenses by more than US$110 million per year, Novell said.

The moves are intended to focus Novell on growth opportunities, according to the statement.

Also Wednesday, Novell moved toward a possible spinoff of its consulting subsidiary, Celerant. Its board authorized Novell management and the company's financial advisor, Citigroup Corporate and Investment Banking, to explore strategic alternatives for Celerant, the statement said.

In an interview earlier on Wednesday, Ron Hovsepian, Novell's new president and chief operating officer, had said the layoffs and other restructuring details would be announced at the same time as the company's fourth-quarter financial results. However, even though Hovsepian told reporters the financial announcement was imminent on Wednesday morning, Novell announced the layoffs later in the day without revealing the financial results. When it releases the fourth-quarter numbers, Novell will give more information and updated financial guidance, according to the Wednesday statement.

Hovsepian described Celerant's business as "noncore" to Novell, but said the company isn't planning to sell of its GroupWise collaboration software or its ZenWorks resource management software.

In its most recent financial report, released Aug. 25, Novell reported poor third-quarter results, with net income plummeting 91 percent to US$2.1 million, while revenue fell 4.7 percent to US$290.2 million.

(China Martens in Boston contributed to this report.)

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