Laurent Lachal
Novell Q2 2007 Results: Still a long way to go
Novell yesterday announced financial results for its second fiscal quarter ended April 30, 2007. Net revenue went up 2.6% year on year to $239 million with software licensing increasing faster (4.1% to 17.4% of revenue) than maintenance (up 2.2% of revenue to 52% of revenue) and service revenue (down a whopping 37% to 31%). Comment: The slight revenue increase and improved profitability makes it a relatively good quarter. Novell expects total fiscal 2007 revenue to be flat with an increase in Linux and identity management revenue offsetting the decrease in its legacy (mostly Netware) business. It is broadly in line with this plan: during the second quarter Linux revenue rose higher than anticipated; identity management revenue was below expectation; but legacy revenue decreases slowed. Total deferred revenue was $700 million at the end of the quarter, up $354 million (or 102%) from the previous year. The company intends to boost profitability by lowering sales and marketing, R&D and administrative expenses. Based on this quarter's figures, it still has a long way to go to achieve its stated objectives. EMEA had a lacklustre performance, North America bounced back slightly while the Asia Pacific operation had a very good quarter. The EMEA figures were impacted by the sales of the UK-based Salmon service business and by disappointing identity management revenue growth. The recent deal with SAP, which has singled out Novell's Suse Linux Enterprise server (SLES) as its preferred Linux platform, should help improve EMEA results. The company has finalised its stock option review and is now current with its SEC financial filings.
