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Novell Blames W2K, Linux for Drop in Earnings

Novell Inc. announced yesterday that it will report lower than anticipated revenue and earnings for the second quarter of 2000, which ended April 30. The company cites a weak global sales channel and the introduction of Windows 2000 and growing interest in Linux as key factors in the drop-off.

Novell (www.novell.com) expects to report full financial results for the second quarter after the close of the market on May 23. In the first quarter of 2000, Novell reported $316 million in revenue and $0.13 per share. The company expects to report total revenue for the second quarter of just over $300 million and earnings of $0.08 per share.

Novell blames a decline in channel sales as the primary factor in the lower than expected revenues. The company also cites a decline in its large account site-license business. However, Novell specifically points to the uncertainty, market shifts, and delayed sales created by the tandem punch of the release of Windows 2000 as well as growing interest in Linux as reasons for the company's second quarter slump.

"We have already started to take actions to realign our sales and marketing efforts around our recently introduced Net services software strategy," said Dennis Raney, Novell senior vice president and CFO. "We believe these changes will take the remainder of fiscal 2000 to be deployed." - Isaac Slepner

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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