Laurent Lachal
Novell reveals another set of disappointing results
Yesterday, Novell announced financial results for its fiscal Q2 ended 30 April 2006. Total revenues were down 6% to $278m. Net income was $3m ($10m on a non-GAAP basis) up from a net loss of $16m ($2m net profit on a non-GAAP basis) in 2005. Foreign currency exchange rates impacted net income favourably by $1m. Cashflow from operations was a negative $24m, up from a negative $25m. Deferred revenues were $346m at the end of the quarter, up by $25m or 8%. Novell expects net revenues of $239-247m for Q3 2006, excluding revenues from the sale of management consulting subsidiary Celerant, which Novell announced last week. Comment: Another quarter, another disappointment. Software licence revenues were down 12% following a 5% decline the previous quarter. Maintenance shrunk 5%, about the same decline as the previous quarter. Combined revenues from OES and NetWare-related products declined 16%. Sales of hybrid Netware-Linux Open Enterprise Server (OES) went up $38m year-on-year to $46m, but increased only 6% sequentially. Linux Platform Products were up 20% to $10m year-on-year, but were down 1% sequentially - very disappointing compared to Red Hat's growth. Systems, Security and Identity Management products managed a respectable 16% growth year-on-year to $61m. Identity and access management did particularly well, with growth of 37%. EMEA was the worst hit region, down 13% year-on-year. Asia Pacific shrunk only 3% year-on-year, but was up 16% sequentially. Cash, cash equivalents and short-term investments were $1.3bn at 30 April 2006, down $347m from the last quarter, primarily due to cash used to repurchase common stock ($267m) and the acquisition of e-Security at the very end of the quarter. Novell spent an additional $133m on common shares after the quarter's end to complete the share repurchase programme authorised and announced in September 2005 and amended in April 2006. The programme was meant to placate dissatisfied shareholders. The company would have a better chance of succeeding if it stopped its string of lacklustre results and finally bounced back.
