Bonum Certa Men Certa

Novell is Operating at a Loss (Updated)

HSBC, which picked SUSE Linux a few months ago, has just reported great growth (in terms of online activity at least), but the same cannot be said about Novell. Someone has wrestled with the numbers and came to the conclusion that "Novell's First Quarter Goes into the Red".

In the first quarter of fiscal 2007 ended January 31, Novell said that software license sales amounted to $38.5 million, down 9 percent, while sales of maintenance contracts, software subscriptions (which are really for support, not for the open source software itself), and other services came to $191.2 million, down 4 percent. Total sales for the quarter came in at $229.6 million, down 5 percent. While Novell has kept a tight rein on costs relating to the products themselves, the company has increased spending on sales, marketing, development, and general costs; it has also booked a $7.4 million restructuring charge in the quarter and written off $10.8 million in assets. These factors pushed Novell to a $31.3 million operating loss. Because Novell has over $1 billion in cash in the bank and $790 million in short-term investments, it was able to post a $20.7 million gain in investments and it also sold some venture capital funds for another $3.6 million. When all the math was done and the taxes paid, that worked out to a $19.9 million net loss, or about 6 cents per share, compared to a net profit of $1.9 million in the year ago quarter, or 1 cent a share.


Update: The Inquirer has more to say about the figures (slight corrections to INQ banter language).

The thousands of pins stuck into the effigy of Novell by Open Sorcerers seems to have had a dire effect on the company's bottom line.

The Open Source movement threw up its collective hands in disgust when Novell signed a pact with Microsoft promising not to sue each other over software patents.

Now it seems that Novell's software license sales have dropped by nine per cent and the company has started to lose cash. Sales of maintenance contracts, software subscriptions are down by four per cent and total sales are down five per cent.


Boycotts seem to have become effective owing to the voices of the Internet.

Motley Fool (fool.com), which has always seemed like a strong pro-Microsoft financial Web site, has its facts skewed.

Novell has shown some real commitment to the ideals of the open-source community lately.


Who are they kidding?

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