Novell CEO: Spin-offs Not on the Cards... Yet

SAN FRANCISCO (08/16/2000) - Novell Inc.'s chief Wednesday poured cold water on rumors that the software vendor is looking to spin off some of its businesses.

However, he didn't rule out such a move in the future.

"People love to generate rumors," Novell Chairman and Chief Executive Officer Eric Schmidt said in a conference call Wednesday afternoon to discuss the company's third-quarter financial results. However, he quickly added that it's important for Novell to consider any strategic initiatives that might help generate value for the company's shareholders.

"The answer (today) is no (to spin-offs)... we have no plans specifically to talk about," Schmidt said. "It's mind-boggling that a company can be undervalued with all of its parts, but overvalued" when its parts are spun out, he added.

Although Novell met its third-quarter revenue and earnings targets, the company was disappointed by its poor software sales worldwide, due in large part to a confused channels strategy that the vendor is in the midst of trying to untangle. [See "Novell Still Plagued by Poor Software Sales in Q3," Aug. 16.]Novell unveiled a major company reorganization in May when it released poor second-quarter fiscal 2000 results. [See "UPDATE -- Novell Reorganizes Operations Amid Poor Q2," May 23.] In the reorganization, the vendor split its businesses into four core divisions to better focus on meeting customers' needs. They were three product engineering units -- Net Management, Net Directory and Net Content -- and a services unit known as Novell Customer Services.

Speculation had been rife that Novell was to announce the spin-off of its Net Content division, to be followed by Net Directory. Net Content includes Novell's application delivery services, caching and content exchange, while Net Directory aims to evangelize Novell's directory software.

Novell, in Provo, Utah, can be reached at +1-801-222-6000 or via the Internet at http://www.novell.com/.

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