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Novell’s Channel Breaks Further, Novell Loses Over $200,000,000 in 2009 (Fiscal)

Posted in Finance, GNU/Linux, Microsoft, Novell, Ron Hovsepian at 6:00 pm by Dr. Roy Schestowitz


Summary: Novell is losing its UK distributors and there is little hope for rebound based on the financial situation and general trend

Hitherto, Novell has been pretending that Microsoft’s patent deal will spell the renaissance of Novell. Not even as a Microsoft subsidiary can Novell be incarnated given that it’s losing business to Microsoft. To give just one example from this week’s news:

Domino’s was using Novell’s GroupWise for about 1,000 users and realized that encryption was necessary to protect the communications involving the employment information that’s transmitted between its stores and its outside benefit providers. The restaurant chain began deploying Proofpoint and Voltage’s encryption products while still on GroupWise because it planned to work with both GroupWise and Microsoft Exchange/Outlook when the company upgraded later, Anderson explains.

That’s what friends like Microsoft are for.

We actually found it interesting that Novell is ‘pulling a Microsoft’ [1, 2, 3, 4] with a new “study” that’s intended to help Novell lobby and elevate sales.

The goal of Novell’s study was to find out what sort of solutions are used by the Hungarian CIOs (focusing on the large enterprises, governmental and educational institutions), if they are content with their current systems, what are the major challenges they face and in what direction do they plan to advance.

Regardless of Novell’s efforts to successfully woo CIOs, its channel in the UK keeps breaking apart.

In the UK Novell has reduced its distribution by 35 percent – including the addition of Avnet in August. Veitkus says he expects its number of ‘non-performing’ resellers to shrink by roughly the same figure.

We wrote about this before. Novell’s broken channel and abandonments do not help and now comes another major UK setback:

Software licensing VAR Trustmarque has cut the number of distributors it works with for 14 of its main vendor lines worth a combined £30m annually.

Some 14 distributors bid for the business but only 10 were selected following a three-month tender process that finished last week.

Vendors covered by the tender include Citrix, Novell VMWare, McAfee, Adobe and Websense. Magirus picked up the VMware piece, Interactive Ideas bagged Novell, Arc Technology the McAfee business and e92plus the Websense segment. Other distributors to make the cut include Bell and Computer 2000.

So the future is not so bright, either. Novell’s terrible financial results that we wrote about last week [1, 2] are discussed in the same publication as above. It says:

Novell has swung to a $206m (£124m) loss for its fiscal 2009 after taking a whopping $279m impairment hit in its final quarter.

More here:

Novell Inc. NOVL said its fiscal fourth-quarter loss widened to $255.7 million, or 74 cents a share, from $16.3 million, or 5 cents a share, in the year-ago period. Excluding one-time items, the IT management software company said it would have reported earnings of 11 cents a share. Revenue fell to $215.6 million from $244.7 million last year.

And here:

Software company Novell Inc.’s (NOVL) fiscal fourth-quarter loss widened on a $279 million impairment charge and lower revenue, although revenue from its Linux-platform products increased 14%. Novell, Inc. (NASDAQ:NOVL, $4.04, +$0.13, 3.32%) dropped 1.73 percent to $3.97 on Friday morning pre-market trading session, while on Thursday, shares of Novell were up 3.32 percent and closed on $4.04.

To quote a comment on the subject:

Ron is asleep at the wheel ? No more after a few big customers ?

Submitted by atang1 on Sat, 12/05/2009 – 04:33.

When the chips are down, the CEO has to bring the big customers in? Ron Did British Telecom(security management) and Peugeot(Linux desktop) and Micropsoft paid for Linux services(bugs fixing) for their customers, then silence for years.

One has to examine one’s own destiny? Miguel does not have any technology that can be turned into money?

Netbooks are changing in architecture(simple multicored cpu for realtime vs. virtualization and USB 3.0 bus), data centers are changing to triple play. Where Novel is going, nobody knows. A $billion dollar company has to size and target customers, all the time?

We are stockholders of Novl. Opinions here maybe biased.

A former employee of Novell says that “Novell’s quarter crumbles” and here is just how bad it is:

In third quarter earnings news, computer networking and services company Novell (NASDAQ:NOVL) reported a loss of 74 cents per share. Analysts had expected a 7 cent per share profit.

That is a lot of money to lose in one year, especially considering the reduced expenses (layoffs and other cancellations).

Novell has reported a net loss of $256m for the fourth quarter of 2009, compared to a net loss of $16m in the same quarter last year. Revenue declined 12% to $216m.

Novell cannot go on like this forever. Is it time for Ron Hovsepian to beg again?

Ron Hovsepian begs Ballmer

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