Bonum Certa Men Certa

Why SUSE Engineers Should Abandon Novell and Start Their Own Company

Chart: Novell 2009 Q3



Summary: Novell is aimless without SUSE (GNU/Linux), but GNU/Linux is not Novell's property. Novell's latest results make a solid case for abandonment and a restart of S.u.S.E. under a different name

Yesterday night we wrote about Novell's disappointing results. A more detailed post was promised, so here it is compressed into the set of links that informed and made up overall judgment.



Novell issued a press release to prepare investors and analysts/reporters for the date of the results. The Var Guy had a little countdown which Sam Dean cited.

First up, Novell is scheduled to announce third-quarter results on August 27. The anticipated good news: Novell is expected to deliver a profitable quarter, with results expected to slightly exceed the performance of Novell’s Q3 last year, predicts The Motley Fool.


Here is the article from The Motley Fool (maybe one among several) and here is a prelude to Novell's results.

Other S&P 500 listed companies Medtronic (MDT), Novell (NOVL), Staples (SPLS) and jeweler Tiffany & Co. (TIF) will report quarterly earnings this week.


Nearer to that time there was apparently a delay, but previews were quite accurate. The press release (also appearing here) eventually came and then there was the Earnings Call, of which we have a full transcript. Attending for Novell were Ron Hovsepian (CEO), Dana Russell (CFO), and Susan White.

“Fox carries the same message too, but in another Fox page it says clearly that the revenue fell short. They can’t have it both ways.”These results were soon parsed based on the press release and Market Watch revealed the deficiencies (also mentioned in Fox and some aggregated reports like this one and that one).

RTT News had this couple of reports and another source (also in here) called the results "inline" even though expectations were missed. Fox carries the same message too, but in another Fox page it says clearly that the revenue fell short. They can't have it both ways.

Novell's overall profit is attributed to lower expenditures (including staff layoffs).

The Wall Street Journal said that shares had fallen due to the revenue fall, whereas Reuters claimed that Wall Street's expectations were met, which contradicts other reports, but not this one:

Novell Inc. (Nasdaq: NOVL) 2.3% LOWER; reports Q3 EPS of $0.07, ex-items, in-line with the analyst estimate of $0.07. Revenue for the quarter was $216 million, versus the consensus of $216.64 million.


It probably all depends on whose expectations and whose estimates.

In some subsequent reports it came up that Novell was sliding at a significantly high pace.

Among the companies whose shares are actively trading in the after-hours session are OmniVision Technologies Inc. (OVTI), Netezza Corp. (NZ) and Novell Inc. (NOVL).


More from The Wall Street Journal:

But shares fell about 4.5% in after-hours trading...


Fox Business argued that Novell would be worth watching on Friday and this turned out to be true. Novell slid over 7% in today's trading. Then there's Dell compared to Novell.

It may seem as though denouncing Novell is hurting GNU/Linux, but it could not be further from the truth. Well, as the Var Guy puts it, SUSE is doing quite fine, but Novell's proprietary strategy is not working out.

Novell: Linux Up, Security Down



[...]

Now, for Novell’s lingering problem. As the company’s open source business continues to grow the rest of Novell continues to contract.

A prime example: The VAR Guy was particularly surprised to see Novell’s Identity, Access and Compliance Management business fall 16 percent to $28 million for the quarter. Security is a growing market, folks. It’s among the top things businesses continue to invest in during the recession.


This was also the message chosen by Matt Asay and Timothy from The Register. The Inquirer put it like this:

Novell announced that its Linux revenue has made a 22 per cent year-over-year increase, topping $40 million.


Since GNU/Linux is doing exceptionally well in a generally-dysfunctional company, why don't the engineers there start their own company outside Novell and outside the obligations to Microsoft? Since the fruit of the labour is GPL-licensed, there is no real barrier in principle. This code that they write is not owned by Novell; the only SUSE assets Novell has truly got are the engineers on its payroll. They are not immobilised, unless there is something secret and sinister in their employment contract.

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