| Novell's revenue sags, Linux business soars |
Mar. 01, 2007
It's hard to say exactly what's happening with Novell Inc.'s earnings, while it continues to audit its past stock-option practices. Still, while awaiting the results from the audit committee, Novell on Mar. 1 announced preliminary financial results for its 2007 fiscal year first quarter, showing net revenue of $230 million.
The first quarter's revenue represented a decline of $12 million, or about 5 percent, from the prior year's first quarter revenue of $242 million.
The loss available to common stockholders from continuing operations in the latest reported quarter was $20 million, or $0.06 loss per common share. This compares to income available to common stockholders from continuing operations of $4 million, or $0.01 per diluted common share, for the first fiscal quarter 2006.
Despite the unexceptional overall results during the first fiscal quarter 2007, however, Novell reported $15 million of revenue from Linux Platform Products, up 46 percent year-over-year, and $91 million of invoicing, up a whopping 659 percent year-over-year. Linux -- make no doubt about it -- is Novell's future.
The revenue from Novell's identity and access management was $24 million, down 7 percent from the prior fiscal year's first quarter. Combined revenue from Open Enterprise Server and products related to NetWare declined 18 percent from the year ago period.
Ron Hovsepian, Novell's president and CEO, stated, "We are very pleased with our first quarter Linux results and momentum. We have made good progress toward implementing our strategic initiatives and achieving our key fiscal year 2007 milestones. Overall, our quarterly results were mixed and we will need to improve our execution in our identity, security and systems management businesses. We feel confident that we are on the right path to put Novell on target for sustained profitability."
In after-market trading, stock buyers were not impressed. Following a day of modest gains, Novell's stock went down by an even more modest 2.83 percent, to $6.52 per share.
Novell CFO Dana Russell also reported that Microsoft had issued more than $73 million worth of certificates for Novell's SLES (SUSE Linux Enterprise Server) to customers during the fiscal first-quarter. While this made little difference to Novell's first quarter financials, Russell believes that these SLES certificates will lead to $20 million in revenue over the 2007 fiscal year.
Deferred revenue was $728 million at the end of the fiscal first-quarter, up $361 million, or 98 percent, year-over-year. Cash flow from operations was $348 million for the quarter, an increase of 1,292 percent from the $25 million of the year-ago quarter. Both of these substantial increases were attributed to the the Microsoft agreement completed during the first fiscal quarter of 2007. The Microsoft partnership alone put $348 million into Novell's pockets.
Novell continues to be cash-rich, with cash and cash equivalents of $1.8 billion as of Jan. 31. This was up from $1.5 billion in Novell's previous fiscal quarter
As for Novell's stock option investigation, the Audit Committee of its Board of Directors, with the assistance of independent outside counsel, is continuing its work. The company expects to file its late SEC forms after this review is concluded.
-- Steven J. Vaughan-Nichols
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