As expected, financially troubled Novell today pink-slipped 900 employees in an attempt to bring its expenses in line with revenue.
The company, trying to rebound from several disastrous financial quarters, Wednesday announced that it is laying off 16% of its workforce to save approximately $45 million. It will take a $40 million to $50 million restructuring charge for employee severance, goodwill and prepaid software royalties in the fourth quarter.
The reductions are the result of cost realignment in all areas of the company, but are not horizontal across all departments, the company claims. For instance, Novell Consulting Services, who generates billable income for the company, did not suffer any cuts.
Employee reductions took place in development areas dedicated to proprietary protocols such as Novell's IPX and clients, such as the Novell Client for Windows NT. Steve Adams, senior vice president of marketing, said that the company remains committed to its core NetWare, GroupWise and BorderManager and ZENworks, as well as further development of thin-client technology.
While the company restructured to save $45 million, it will increase spending in the 'Net Content division, which aims at the company's caching and Internet content products, JustOn storage services and DigitalMe identity services. Aggregate savings will be about $20 million.
The company also will focus on building its relationships with integration and consulting partners such as Deloitte & Touche. It will reduce its cost of doing business by approximately $25 million, beginning in the first quarter of 2001.
Novell, though much slimmer, still maintains 4,600 employees worldwide.
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