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Interview: Novell COO - company reorganization is 'first step'

By Clare Haney
IDG News Service, 05/24/00

Tuesday was a busy day for Novell, not only did the U.S. networking software vendor announce its second-quarter financial results, but it also unveiled a major company reorganization.

The move to restructure Novell into four units more keenly focused on customer needs is in part due to a recent plunge in the company's indirect sales. These channel problems seriously impacted the vendor's second-quarter results, Novell executives said.

Stewart Nelson, Novell's chief operating officer, talked to IDG News Service (IDGNS) in a phone interview about the channel issues and the company reorganization.

IDGNS: How long have the issues with your channel been going on? Why didn't Novell pick up on them sooner?

Nelson: When we announced our first-quarter results we indicated that there were some problems, so that's this (second) quarter and last quarter. We announced the problems as soon as we'd seen signs of them. Our channel sales didn't drop until the beginning of this year.

We're now trying to define the spaces for the channel to own and be very successful in. We'll announce those spaces in the next 30 to 45 days.

IDGNS: How long will it take Novell to get the company reorganization announced today fully in place? Did you ever consider spinning out parts of your business?

Nelson: We didn't talk about spinning out any part of our business. The reorganization will be in place by the end of the week. It's something that we've been planning for a while, the channel sales drop-off provided the catalyst for us to go ahead and get the reorganization executed.

IDGNS: How about the impact of the fall in channel sales round the world, can you recover the lost ground especially in Europe, the Middle East and Africa?

Nelson: Each region is a little bit different from the other regions. The channel issues we see are global and there's the need to solve them globally.

IDGNS: How did it feel seeing Novell's stock plummet nearly 40% on May 3 after your profit warning was issued late the previous day?

Nelson: I'd rather it not have happened. Any preannouncement is the worst case scenario, it's a very negative event by definition.

IDGNS: Novell has always had marketing issues, how can you solve them?

Nelson: I think we've already started on that somewhat. When we announced our one Net vision at BrainShare (Novell's user conference in March in Salt Lake City, Utah), the audience and analysts were all positive about it. The issue right now is to execute on that vision. It'll be tough, but we will overcome the marketing issues.

We will continue to evolve the company - this (Tuesday's reorganization announcement) is the first step. I don't want to leave you with the message that we're done. Novell, in Provo, Utah, can be reached at www.novell.com/.