CEO says Novell plans to 'stay the course'

It has been a rough ride of late for Novell and its CEO, Eric Schmidt. Last September, the networking software and services vendor laid off 16 percent of its workforce after seeing a sharp decline in revenue and profits. Since then, it has reported losses in its past two fiscal quarters, including a US$13.3 million operating deficit in the three months ended Jan. 31.

In a bid to reposition itself, Novell last week announced a deal to acquire Cambridge Technology Partners ., an IT services and consulting firm that also has been beset by losses and layoffs. If the acquisition goes through as planned, Cambridge Technology CEO Jack Messman is due to take over Schmidt's position at Novell.

The company said Schmidt will become its chairman and chief strategist after the deal is completed. At Novell's BrainShare 2001 user conference here yesterday, Schmidt talked with Computerworld about the planned acquisition and the future of Novell.

Q: Both Novell and Cambridge Technology Partners have had some rough financial quarters recently. Now that you're merging, what's going to make things any different for you?

A: I'm not sure I agree about the rough quarters. Novell's last quarter was break-even because of the continued PC industry slowdown. Also, [the current] quarter probably will be break-even and [our] revenue will probably return to normal levels subsequently. Aside from NetWare, our other software lines have grown between 20 percent and 40 percent yearly. On the Cambridge Technology Partners side, my understanding is they have not been profitable because of the dot-com collapse.

Q: Are you going to redefine Novell as a services company?

A: We are not redefining ourselves as a services company. We're a product company with a solutions arm attached.

Q: Will there be the temptation for Cambridge Technology Partners to sell only Novell products?

A: If you think about what they sell, they sell e-business solutions. You call up and say you want a customer relationship management solution, so they recommend [software from] Siebel Systems. It's hard to imagine that would alter too much. It's not like they would recommend NetWare vs. Windows. My sense is that the technology component we will offer will not change the fundamental way they operate.

Q: Do you fear that Novell itself could be acquired by another company?

A: There are no fears of being acquired. None. In the short term, there are lots of pragmatic reasons that will not happen. People will want to wait and see if our [new business] model works. We are not for sale, but . . . you as an individual may purchase our shares one share at a time.

Q: You said your decision to step down as CEO was solely yours. Why are you doing it?

A: In looking at the merger, the first thing was to decide who would run the combined company. Who would be the better choice? Jack . . . has a lot more experience running a company at this level. I said I want to be chairman and work on strategy and do evangelism, which is what I like to do. We'll define it better after the merger is done.

Q: Everyone claims to have an e-business vision. What's your e-business vision?

A: Every company claimed to be Internet-enabled, down to the people who make paper clips. What I would say is that our vision of own role is much more narrow. We don't run around and say we're an e-business environment. We're a component of an e-business solution. We're not an e-business company; we're a network services company. The strategy has not changed. The company is going to stay the course. [We have] lots of cash and . . . lots of resources.

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