Novell reorganises amid poor Q2 results

Novell in the US is reeling after last week announcing poor second quarter results and a company reorganisation designed to improve performance. For Novell users, who have weathered their share of ups and downs with the company, it is more of the same all over again.

"It is a little disheartening to see [Novell] reorganising yet again," said one IT manager, who wished to remain anonymous. "It seems like they just did this a little while ago. I understand that this crazy technology world requires a lot of change . . . but there's nothing wrong with projecting an image of stability to reassure your customers."

Novell's warnings earlier this month of lower second-quarter earnings and revenue proved to be on target. It reported revenues of $US302 million ($523 million), or nine US cents per share, which included a $35 million royalty payment from Caldera Systems, and net income of $31 million. During the second quarter of 1999, Novell saw revenues of $316 million, or 11 cents per share, with net income at $38.7 million.

Novell chairman and CEO Eric Schmidt said overstocked channels along with packaged software revenues that were "about half" of past quarters accounted for most of the drop. Schmidt said Novell is tackling the shortcomings and hopes to have the situation in hand by early 2001.

Other factors blamed for the second quarter drop included Microsoft's Windows 2000 launch, which Novell said took dealers' attention from Novell products (although Novell also claimed not to be losing market share to Windows 2000) and the rise of Linux.

Novell's reorganisation creates four business units, each with its own focus and distribution channels.

The Net Management unit will contain products such as NetWare and GroupWise, and the Net Directory unit will focus on spreading the reach of directory services. A new customer services group will centralise Novell's customer relationships.

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