Novell may make more acquisitions to fill product line

Novell continues to look at acquisitions to fill its product line, Ron Hovsepian, the company's president and CEO, told reporters in Bangalore Monday.

The company will look at acquisitions in the areas of open source software as well as software for data centers and identity management, Hovsepian said.

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The company's cash, cash equivalents and short-term investments were $1.1 billion as of Oct. 31, and Novell plans to deploy some of that capital to acquire companies, Hovsepian said.

The acquisitions by Novell in the last 18 months or so have helped promote interoperability and heterogeneous management, he added.

The company announced in March last year the completion of the acquisition of PlateSpin, which brought to Novell technology for the movement of workloads between physical and virtual environments across operating systems. Novell is now planning to extend the technology to provide tools to users that will enable them to move workloads from virtual environments to a cloud computing model, Hovsepian said.

Novell also announced in October a definitive agreement to acquire the business service management company Managed Objects. The acquisition extends Novell's portfolio of data center technologies by adding tools to provide a unified view of all information and workloads, including potentially a cloud environment, Hovsepian said.

Novell plans acquisitions to fill up its product line even as Hovsepian forecasts that the first half of this year is likely to be very slow for the IT industry as a whole.

"I think CIOs are going to be reserved in their spending, they are going to be cautious, and then as they start to get into the end of the second quarter, they are going to try to hold off expenses as long as they can," Hovsepian said.

Novell, which is laying off fewer than 100 of its 4,100 employees, does not however have plans for further layoffs, Hovsepian said. The company has focused on trimming its cost structure for the last three years, and will continue to try to manage within that, he added.

The company has not cut down on ongoing development of products, Hovsepian said. It has over the last two years reduced the number of development centers from about 15 to four large centers in Bangalore, Provo, Utah, Nuremberg, Germany, and Toronto, and about three medium-size ones, but that is mainly to make them easier to manage, Hovsepian said. Many of the smaller centers became part of Novell after the acquisition of other companies.

The company's Bangalore development center houses about 600 of the company's approximately 1,500 development staff, and may not add any more workers this year because of the economic conditions, said Naresh Shah, Novell's vice president for Global Engineering Strategy and managing director of the India development center. The Bangalore center is Novell's largest development site outside the U.S.

Expanding its development operation in Bangalore over the last two years has helped the company get more productivity out of its development dollars, Hovsepian said. The company has also moved product management for some of its products to the Indian operation, which has end-to-end responsibility for some of Novell's products, Shah said.

The IDG News Service is a Network World affiliate.