Novell's shares tank after profit warning

Novell's stock dropped almost 40 percent on Wednesday after the US networking software vendor warned earlier this weej that its second quarter earnings and revenue for fiscal 2000 will be substantially lower than expectations.

The Nasdaq stock exchange closed on Wednesday with Novell stock at $US10.62, down $6.93 or 39.5 percent.

Novell said it expects to report revenue for the quarter ended April 30, 2000, at just over $300 million and earnings per share at about 8 cents.

In contrast, the consensus estimate of analysts polled by First Call/Thomson Financial had predicted Novell's earnings per share would be 16 cents for the second quarter.

Company officials said in a statement that they blame declines in channels sales for the likely second-quarter losses and added that they are implementing plans to better market Internet software services.

One analyst said that the company's Novell Directory Services (NDS) -- has run up against stiff competition from Microsoft's Active Directory. "Novell has yet to come up with a compelling post-millennium strategy," said Rob Enderle, a senior analyst at market research company Giga Information Group Inc., in a phone interview today. "How do they remain relevant in an Internet world?" is the key question Novell needs to answer, he added.

Novell plans to report its second-quarter results in full after the markets close May 23.

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