Novell hit by poor European sales

Novell has blamed weak European sales for another poor financial performance, and warned that its revenue will continue to be 'soft' until revised ebusiness and channel strategies kick in.

The networking giant, which axed 900 jobs in September following disappointing third quarter results, yesterday announced a 21 per cent drop in revenue to $273m compared with $345m a year earlier.

Novell reported a fourth quarter loss of $35m for the period, compared with a profit of $73.8m a year earlier. Loss per share excluding a $48m restructuring charge was 11 cents. Without this charge, Novell would have broke even - in line with Wall Street's expectations.

Company officials blamed the lacklustre figures on a $243m shortfall in traditional packaged software sales and the 33 per cent year-on-year drop in European revenue.

Novell has been pushing so-called large network site licences, which include pre-paid service and upgrade support. Although sales of these licences rose to $750m and accounted for 65 per cent of total sales in the company's fiscal 2000, they failed to offset the huge decline in package software revenue.

Novell warned that recovery would not be immediate. Chief financial officer Dennis Raney said: "We expect overall revenue performance to continue to be soft until we gain the combined benefit of new ebusiness deployments and complete a shift in channel programmes to include a new group of partners from the ranks of consulting system integrators and other service providers."

It has been a tough year for Novell. In September the company announced plans to axe 900 staff after disappointing third quarter results. Revenue for the third quarter fell from $327m to $270m, while profit fell by 83 per cent to $8.6m.

Last month Oracle, one of Novell's important partners, told customers that it would cease to support Netware, forcing users to migrate to other platforms.