Net Woes for NetWare
PROVO, Utah -May 2, 2000 - Novell, Inc. (NASDAQ:NOVL) announced that it
will report significantly lower-than-anticipated revenue and earnings
for its second fiscal quarter ended April 30, 2000. The company expects
to report total revenue of over just $300 million and earnings of approximately
$0.08 per share, including the benefit of a $35 million royalty payment
from Caldera, Inc. the principal portion of which relates to an antitrust
settlement between Caldera, Inc. and Microsoft.
Street was not kind to the news. Novell stock, which had begun May at
19 15/16, was down to 45% to 10 15/16 by the end of the week.
NetWare isn't selling like it used to, and Novell's had a hard time seeing
that. PC Week reported that Novell's internal sales forecasts were off
by $10 million a week in March and April 2000. Novell is trying to transition
to being a software vendor for e-business.
developed some good products - their eDirectory is regarded as best-of-breed
for enterprise/e-business directories. [See TEC's article: Novell
Uses XML, LDAP, NDS to Manage AD, IOS, etc.] But it's taking a lot
longer to stop being a NetWare-centric company. Unfortunately for NetWare
shops, Windows 2000 and Linux aren't giving Novell much breathing room.
This sort of news is devastating to software vendors. When even Microsoft
is thinking about eliminating Novell support in its next consumer version
of Windows, you've got problems. [See TEC's article: Microsoft
Windows Me -- The Millennium DOES Begin in 2001.]
Novell doesn't yet have the cash flow from next generation products to
make up for the fall-off in NetWare sales. Without that onetime Caldera
payment, it had no income for the last quarter, and revenues were flat.
In FY99, Novell revenues, by product segment were:
Novell Inc. FY 1999 Revenues By Product Line
|NetWare 4 and NetWare 5
|NDS, eDirectory, GroupWise and related products
|Service, education and consulting
|NetWare 3 and legacy products
NetWare 3's not coming back, and the end of Y2K-related
consulting will blunt demand for services and consulting. If NetWare 5
slips (60% likelihood), it clouds Novell's ability to fund future R&D
and support for NetWare. In that case, look for the company to find a
buyer, or for its depressed stock price to make it an acquisition target
Give Novell a year to develop its own revenue base and continue NetWare
support. If sales don't improve, and Novell isn't sold or taken over,
NetWare shops will need to think about transitioning to another network