EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

06.02.08

Novell’s Financial Hocus Pocus: How Poorly is It Really Doing? (Updated)

Posted in Finance, GNU/Linux, Microsoft, NetWare, Novell, SLES/SLED at 5:12 am by Dr. Roy Schestowitz

“Novell is dying,” concludes one man

One issue worth exploring is future prospects of Novell. The company is still in a state of gradual transition.

There are 12 of us at the moment in the IRC channel ( #boycottnovell @ FreeNode ), which has just been formally registered. One subject that was willingly brought up is Novell’s latest financial report, which we mentioned a couple of times last week [1, 2].

Here is last year’s annual report (published in December 2007) and the corresponding document on the SEC’s Web site. Also consider this quick analysis, which basically showed us that Novell pays Microsoft for SUSE sales that it makes, based on volume. Here are some notes about the report from March 2008 and here is the latest report, or at least a synopsis (truncated documented). The full report can be found and read here (free registration required).

Beneath the surface you already find some similar responses to ours, e.g. from LinuxToday:

I’d love to know how Novell is going to replace several hundred million dollars of revenue around Netware, which Microsoft is systematically having for lunch, with a pitiful thirty million dollar Linux business that Red Hat wouldn’t get out of bed for. You do the math.

Personally, I seriously doubt the revenue increase claims, because Novell’s Linux business has been treading water around that figure for a few years now. Any revenue increase on such a small figure when compared with their historical Netware revenues (which they have to replace), and those of other companies Novell thinks it competes with, such as Red Hat, are just insignificant.

Further, it says:

Microsoft is not a partner [of Novell]. It’s a very direct competitor, and the reason why Novell went cap in hand to Microsoft is because they can’t compete, they don’t have any idea of the first thing to do to try and compete and they simply want Microsoft to stop taking them to the cleaners. This was all they could come up with to make it stop.

Another person takes a look at the hard numbers

Looking at the “Total net revenue”

2008 – $235,666
2007 – $232,387

Which is good. It is an increase. But it’s an increase of:
$3,279.

Now, the claim is:
29 = x + .31x
29 = 1.31x
22 = x (approx)

So Novell’s Linux segment earned $7 million MORE than last year …

And every other segment is doing good, too …

But the total increase is LESS than the increase of Novell’s Linux segment.

Which really doesn’t make any sense. In order for the total to be less than one of the segments, at least one of the OTHER segments has to be doing worse than last year.

[...]

Someone later jumped in to defend Novell, but the argument backfired because it did not correspond to simple facts.

Yes. And unlike you, I know what “Workgroup product” means. That’s NetWare. Their largest revenue stream is dying.

So a 1% loss in NetWare almost completely offsets a 31% gain in SuSE.

Novell needs to get customers for their Linux product as fast or faster than they lose them from NetWare. And Novell is not doing this.

[...]

If Novell is not gaining market share, then Novell is doing nothing more than milking existing customers.

At best that means that Novell is stagnant.

Otherwise, it means that Novell is dying.

Novell is dying.

Going back to the start, it was Asay who generated the buzz about Novell doing well (a claim backed by Novell’s embellished reports). Looking at his own blog last night, you find this. Given the growth he has been boasting for a long time and also the audiocast where he said that everyone plays the 'bucket game' (including Novell), this just doesn’t seem right.

Update (03/06/2008): This one comes from a notorious author, but it sheds some more light.

Novell made $5.87 million, or two cents a share, in its second fiscal quarter ended April 30 on flat revenues of $235.7 million, up only ~$3 million. A year ago it lost $2.9 million, down a penny.

Legal and R&D cost it $4.5 million.

On a non-GAAP basis, income from operations for the second fiscal quarter 2008 was $16 million versus $9 million last year.

The company’s product revenue from Open Platform Solutions, almost all of it Linux, came to $30 million, up 31%.

Service revenues were down 19% to $41.1 million.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New


  1. Microsoft's Patent Allies LG and Sony Agree to Put Microsoft Inside Android

    LG and Sony (of Rockstar Consortium) follow Samsung and Dell in Microsoft's campaign to turn Android into 'Microsoft Android' using patents-induced pressure/leverage



  2. Yet Another Major Security Deficiency in UEFI

    UEFI is inherently insecure, more so than the alternatives which it strives to replace, including Free/libre ones



  3. Links 27/5/2015: Fedora 22 is Out, Mandriva Liquidated

    Links for the day



  4. Patent Scope at the EPO is Totally Out of Control, UPC Will Make Things Worse

    A look at the practical issues with the EPO, where patent scope and litigation scope have been vastly extended so as to benefit multinational corporations and possibly patent trolls



  5. Links 26/5/2015: Reviews of Kubuntu 15.04, Linux 4.1 RC5

    Links for the day



  6. Süddeutsche Zeitung Says Talking Helps While EPO Management Back-stabs Other Side of the Table

    German media gives the impression that there is peace and harmony now that Benoît Battistelli and his circle of power speaks to staff, but nothing is said about simultaneous (albeit covert) attacks against that staff



  7. Large Corporations Call the Shots in US Patent Reform

    A reminder of where we stand on the issue of patent 'reform' in the US and who is controlling or shaping it



  8. Microsoft Puts Proprietary Windows and Hyper-V Inside the Free Software-Centric OpenStack

    OpenStack, which celebrates rapid growth in this month's event in Canada, is facing a proprietarisation threat from Microsoft



  9. Microsoft's Secret Lobbying, Bullying, and the Long History of Blackmailing Politicians Around the World

    British media covers Microsoft's abuse in the UK, but there are many similar incidents, and not just in the UK



  10. Frankfurter Allgemeine Zeitung on Benoît Battistelli and Four EPO Suicides

    German press article from April 2015 (with translations)



  11. Links 24/5/2015: CrossOver 14.1.3, NTFS-3G Vulnerability

    Links for the day



  12. Links 23/5/2015: Fedora 22 to May 26th, Netflix in SteamOS

    Links for the day



  13. The Patents Production 'Industry' (Patent Lawyers) Still Fights Hard to Salvage Software Patents

    A review of recent writings about software patents and patents on business methods in the United States, demonstrating that patent lawyers have gotten very vocal and sneaky (trying to evade the rules)



  14. Patents as a Marketing Strategy: USPTO Now Part of the Advertising Industry

    The existence of publicity patents, or patents whose sole purpose is to advertise some products, serves to discredit the US patent office, which was originally set up to promote science and technology



  15. Microsoft Blackmails and Extorts British Politicians Over Open Standards and Free Software-Leaning Policies

    Microsoft's digital imperialism in the UK getting defended using blackmail, reminding a lot of Brits that Microsoft is just as evil as ever before



  16. Microsoft Gives Another Bug a Name, This Time Logjam™

    The Microsoft crowd is good only at marketing, even when it comes to small bugs in software



  17. Links 22/5/2015: Fedora 22 Final Release is Near, Canonical IPO Considered

    Links for the day



  18. More Utter Shame Unveiled at Battistelli's EPO: Intimidation Tactics With Help From 'Control Risks'

    The unaccountable thugs who run the EPO have hired London-based spooks to help silence their opposition and their critics



  19. GNU/Linux Still Under Attack From Apple and Microsoft, Patents Remain the Weapon of Choice

    A timely reminder of the importance of patent matters, for they are being used to eliminate the zero-cost advantage of Free/libre software and make it more proprietary, privacy-infringing, and user-hostile (as a result of blackmail)



  20. Gartner Group and NASSCOM: Will Lie for FUD, on Behalf of Microsoft and Proprietary Software

    Some of the latest arguments against Free/libre software turn out to be arriving from couriers of Microsoft and its agenda



  21. Windows is a Franchise in Demise, Don't Believe the Hype

    Ongoing propaganda about Vista 10, 'cloud', and other buzzwords or brands are put in perspective



  22. Links 21/5/2015: Fedora 22 RC2, CERN Chooses OpenStack

    Links for the day



  23. Microsoft is Again Showing Its Hatred of Free/Open Source Software by Lobbying the Indian Government to Drop a Rational National Policy

    Microsoft decides to attack Free/Open Source software (FOSS) in India, where the corporate media is very much complicit in misleading the public



  24. Links 20/5/2015: Containers, OpenStack, and EXT4 Corruption

    Links for the day



  25. The PATENT Act, Distraction of Trolls, and Lobbying for Software Patents by Protectionists

    Only large corporations and their lawyers are able to formally change the US patent system through public officials and politicians, despite recent rulings from very high courts



  26. Corporate Media and Friends of Microsoft Are Still Lying About the Cost of Vista 10

    In a desperate effort to beat operating systems that are Free (libre) and free (gratis), such as GNU/Linux or Android, Microsoft shores up the illusion of 'free' (gratis) Windows



  27. Links 19/5/2015: Linux 4.1 RC4, Thunderbird 31.7.0, OpenStack Event

    Links for the day



  28. Links 18/5/2015: Russia Chooses Jolla, Many New Distro Releases, Meizu Devices

    Links for the day



  29. Even Converting an Image to Greyscale is Now a Patent

    Simple mathematics becoming patented as Fujifilm claims 'ownership' of photographic conversion to greyscale



  30. Grooming of the World's Biggest Patent Troll, Nathan Myhrvold of Microsoft and Intellectual Ventures

    UCLA and Microsoft-linked media are framing big thugs as heroes, doing a great disservice to both academia and journalism


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts