Novell?s new chief executive Eric Schmidt faced calls from investors to fire his board of directors, as the ailing network software supplier?s share price plummeted 22 per cent after it issued a warning of lower than expected second quarter sales.
Wall Street had been expecting Novell to post second quarter sales of over $375 million, but on Tuesday the company issued a surprise warning that it expects to post revenues of between $300 million and $335 million for the quarter. A small profit is still on the cards, but investors reacted badly to the news and sent the Novell share price crashing.
The revenue shortfall was blamed on sales of packaged software through third party channels, an area of its operations that Novell has been accused of neglecting in recent years. The company said it intended to review the product mix and inventory in its distribution channel in a bid to beef up sales to small and medium sized customers.
Schmidt, who only joined Novell last month from Sun Microsystems, issued a statement promising: "We will make the changes necessary to better manage and control Novell's business, including setting appropriate levels for operating expenses and product inventories in the distribution channel. I intend to make certain that Novell's resources and priorities are tuned to fully revitalize this company."
But that was not enough to calm Wall Street. While Schmidt himself escaped criticism from investors, other members of the Novell board were picked as targets for the axe, most notably chairman John Young and president Joe Marengi, under whose joint stewardship the company has been run for the past six months.
One shareholder on the Silicon Investor bulletin board accused the Novell ?old guard? of sending their new CEO out to take the flack for their mistakes. "They tried to set up the new CEO," he alleged. "But guess what, he is an honest and smart man. He pre-announced instead of the usual, what they expected him to do, bullshit. This is the first honest thing I have seen a Novell executive do for the shareholders."
Another investor said it was time to replace the board of directors with a fresh team. "Current board members are incompetent at best, perfidious at worst," he complained. "Who do I suggest? Hell, at this point I think Snow White and the Seven Dwarfs would do a great job."
Others were more outspoken in their advice to Schmidt. "Throw the bums out," raged one investor. "Every last one of the old guard. Get ?em out That includes the worthless Marengi and his equally worthless sidekick Young. The firing squad for the lot of them."
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