Novell is still in deep financial trouble after reporting a massive $122 million third quarter loss - greater than its total turnover of $90 million turnover and twice what Wall Street had predicted.
But the company claimed the figures are unrepresentative of its current fortunes and that its recovery is about to begin.
Chief executive Eric Schmidt claimed comparisons with its 1996 figures are invalid because of the money it has spent to lower long term costs and realign resources in its business. The company?s loss was more than double what analysts expected and compared to a profit of $59 million in Q3 1996.
Turnover was down from $365 million to $90 million over the same period. Novell?s fall in turnover was accentuated by the huge channel inventory it was forced to clear and the company claimed the only products it shipped to its channel during Q3 were exchanges and returns.
The company clearly wants the stock market to believe that its financial nightmare is over in one quarter of pain, because it also took a $55 million restructuring charge and laid off 1,000 of its 4,800 staff during the period. It expects a fourth quarter cost reduction of $100 million as a result.
Schmidt knew he faced a challenge to turn Novell around when he joined the company in April but he admitted he was forced to "take an aggressive step to stabilise Novell?s business" during Q3. "Our focus is to deliver Internet products to make Novell a pure Internet/Intranet leader by summer 1998," Schmidt said.
Even after accounting for the charges, sources estimated that Novell?s profit and turnover fell heavily during Q3.
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