Networking software maker Novell is to slash about 1,400 jobs, effectively 19 per cent of its workforce, as it struggles to regain profitability.
The company, which will be left with 6,000 workers worldwide, is also in the process of writing off other unspecified assets and anticipates a pre-tax restructuring charge of about $55m.
The cuts were made in response to the overall decline in the IT market, the oversupply of IT consulting services capabilities, and expectations that the IT market would be slow to recover in 2002, the company said.
Novell said it expects to see about $200m in annual savings from the cuts by the second half of 2002.
Novell hopes to consolidate IT consultancy company, Cambridge Technology Partners, which it acquired last Julym and said the restructuring actions are key to the new solutions focus it is implementing through that purchase.
Jack Messman, Novell chief executive, said that in spite of a very difficult market environment, Novell's fourth quarter was largely in line with the expectations the company discussed during its third quarter conference call.
"Novell is becoming a more aggressive company, adopting solution delivery and support capabilities across every aspect of our business," Messman said. "The actions mean a better structured company with improved profitability."
The company said it has identified greater savings from its business infrastructure and operations than originally anticipated, and the restructuring will be completed in the second quarter of 2002.
Incidentally, earlier this week, Novell said former chief executive Eric Schmidt, who became chief executive of Google in August, has resigned as chairman. Messman, who headed Cambridge Technology, replaced Schmidt as chairman.
Novell, which has seen its shares fall 50 per cent in the past year, faces competition from Microsoft and IBM.
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