Novell's third quarter hurt by slow sales

Software maker Novell Inc. announced third-quarter results showing that the company still has problems with the sales side of its global operations as it struggles to restructure its business.

The Provo, Utah-based vendor announced that revenue for the third quarter, ended July 31, was $270 million, down from last year's third-quarter revenue of $327 million.

The company also announced that its board of directors has authorized $500 million for a share repurchasing program.

Net income is significantly lower this year than last, with only $8.572 million this year compared with $49.311 million in the third quarter of 1999.

"Although we met our total revenue and earnings objectives for the third quarter, we are nonetheless disappointed by continued weakness of packaged software sales globally and especially our poor performance in Europe," said Eric Schmidt, chairman and CEO. "The quarter was impacted by difficult changes intended to improve Novell's business," he said.

Novell is working hard to more fully move its NetWare network operating system and GroupWise groupware software to the Internet, Schmidt said. Speaking of the company's 4 million-plus NetWare user base, he said, "Think what we can do when we move that business to the Web." Positioning the Internet as becoming the data center of the Web, Novell's storage management capabilities should be a good revenue generator, Schmidt said.

In May, Novell announced that it would reorganize because of poor revenue and sales from the second quarter. It said the company would be divided into four sections: net management, net directory, net content and Novell customer services. The move was intended to make the company more market driven, with each division having its own business strategies and distribution avenues.

Schmidt also 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.

Copyright © 2000 IDG Communications, Inc.

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