Novell Wasn't Profitable Even After Sugar From Microsoft

Just before we celebrated the 2008 new year, Ed Moltzen at CRN reported that Novell's 2007 fiscal earning statements show Microsoft's payment of $356 million. Novell's 10-K statement read; "During fiscal 2007, we received $355.6 million from Microsoft related to the Microsoft agreements discussed above, which is being recognized over future periods."

Even with that "sugar" from Microsoft, Novell didn't end up profitable for the year. I don't know how much of the $355.6m payment was recognized as 07 revenue but Novell still ended fiscal 07 with a $44.5 million loss. According to's Todd Bishop, Novell's Linux platform group reported a 69% increase in revenues so it's likely that's where a portion of the Microsoft payment was applied. I have to wonder what Novell's revenues would have been without booking some of Microsoft's payment.

Aside from any direct financial Microsoft payments, will the Microvell deal really help Novell in the long run? It has certain brought the ire of the open source community and painted Novell as a Redmond Redcoat.

If there's one thing that unites the open source community it's battling against Microsoft, seen as the "dark side" commercial Goliath attempting to squash the open source Davids of the world. Novell has lost many Linux fans because of the deal, but to avoid costly litigation and for survivability reasons it may have been the best thing to do. The impact to Novell's sales revenues is something we'll probably never know for sure.

I really have to wonder how this Microvell relationship will pan out in during 2008. In all honesty, that picture is very foggy for me. I don't have any soothsayer predictions to make - the Microvell deal still is just as confusing as the day it was announced. Well, maybe it's $355.6 million clearer at least.

Will all this fade into the corporate history books? I doubt Novell will recover much cache lost to open source fans. The longer term impact and benefits to Microsoft and Novell from this deal are still yet to unfold.

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