Novell job cuts rumours resurface

Rumours that Novell will axe up to 30 per cent of its global workforce intensified on Friday as reports suggested that the networking company will announce job cuts within the next two weeks.

Speculation arose at the end of August when reports claimed that 27 per cent of Novell's 5500 global workforce will go in two tranches before the end of the year.

While Novell executives declined to discuss the rumours, a company representative this week said: "We did commit to lowering our operating expenses as part of budget planning for fiscal 2001. How this will be done depends completely on the budgeting process."

The job cuts are expected to come from Novell's sales force and operations staff at the company's US headquarters, according to fresh reports.

The losses will be a blow to Novell, which had experienced several consecutive quarters of good results after chief executive Eric Schmidt took the helm of the company in April 1997 when it was seeing $14.6m haemorrhaging from its profit sheet.

But in Novell's most recent quarter, revenue dropped by almost 18 per cent to $207m. The company blamed a restructure and year 2000 hangover for the drop.

Dan Kusnetsky, an analyst at researcher IDC, said Novell once led the server operating environment business with a 29 per cent market share in 1996 but this has been dropping year on year to 19 per cent in 1999.

"In 2000 it looks like Novell is on the same [downward] track," said Kusnetsky.

"Novell is in a very interesting position in that its primary revenue stream is technically superior but it is losing market share."

The company has been trying to expand its business with applications such as GroupWise, Zen Works and NDS. But its main form of revenue, the Netware operating environment, is slowing down, added Kusnetsky.

"The other sources are not making it up. The company is in a challenging position," he said.

When it reported its third quarter earnings in August, Novell said it would move to "align the company with the current revenue environment and position for better profitability".

Novell's last major round of layoffs occurred in 1997 and affected 17 per cent of its workforce.