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Novell fattens net in bad financial times


Novell announced good financial results for its second fiscal quarter on May 28th, which ended April 30, 2009. While the net revenue of $216 million was down compared to the net revenue of $236 million for the second fiscal quarter of 2008, Novell squeezed out an increase in its net revenue by cutting costs. Net income was up to $16 million, or a nickel per share form $6 million, or two-cents per share, for the second fiscal quarter of 2008.

The company saw its biggest growth in its Open Platform Solutions area, which, for all intents and purposes, is Novell’s Linux business. Open Platform showed $39 million revenue, and $37 million of that was from its Linux Platform Products. Novell also saw a bit of growth in its Identity and Security Management division. Workgroup product revenue, which was the single biggest profit center, with $79 million of revenue, saw a decrease of 14% year over year. This area, the old NetWare business under a different name, will continue to decline as more and more businesses move away from NetWare.

Novell managed its increase by making large cuts in sales and marketing expenses and smaller cuts in product development and overhead costs. Even taking that into consideration, this was a step up from Novell’s last quarter.

In a statement, Ron Hovsepian, Novell’s CEO said “While total invoicing declined, in line with global economic trends, I am pleased with the continued expansion of our operating margin. Within our portfolio, our growth businesses Linux, Identity and Systems and Resource Management have strong prospects and continue to show promise. Our Linux and Identity businesses have the greatest potential to continue to expand operating margins, and we plan to attain profitability within these businesses no later than 12-18 months from today, barring unforeseen circumstances.”

As in the past, Novell remains cash-rich with cash, cash equivalents and short-term investments of about $1 billion. Looking ahead, Novell CFO Dana Russell said, in a press conference, that the company’s Linux business’ “profitability continues to move in the right direction.”