* Novell told to sell off units and lay off 400 engineers
Even when Novell draws high praise, it seems that there’s always an iron fist in the velvet glove. At least, that seemed to be the case last week when Blum Capital Partners, a major investor in Novell stock, revealed correspondence it had had with Novell board of directors. Among Blum’s suggestions:
* Sell or spin off Celerant Consulting, the British firm recently acquired by Novell.
* Sell or spin off Cambridge Technology Partners, the consulting firm which – in effect – acquired Novell a few years ago since most of the upper management now in place at Novell came from CTP.
* Lay off 400 engineers in Provo.
* Divest GroupWise, Tally Systems and the ZENworks products.
All this so that the company can concentrate on the Linux and identity management sectors of its product line.
Yet SuSE Linux has yet to demonstrate that it’s of interest to the enterprise business customer. According to information gleaned from the financial statements of Red Hat and Novell, Red Hat shows license renewals at a rate of five times those for SuSE.
Two weeks ago, Credit Suisse First Boston analyst Jason Maynard also suggested that Novell divest itself of the consulting businesses and went on to suggest that it also needs major management changes. He lamented the departures of open source advocate Chris Stone and former SuSE CEO, Richard Seibt. Others point to the ascendancy of Ron Hovsepian to the role of “heir apparent” to Jack Messman as a sign of the bad moves the company has made – Hovsepian was president of Novell’s North American unit, the area that has seen its revenue and profits plummet the most.
While I can’t disagree with dumping the consulting businesses (Cambridge Technology Partners has never been profitable for Novell), the Provo engineers, ZENworks and even GroupWise are all profit centers for the company. They are all that’s providing capital and revenue right now. The Linux and identity businesses are promising, but there needs to be revenue now.
As to the company’s management, I’m also on record as advocating major changes – beginning at the top. But Novell is doing some very good things right now – powered by those engineers in Provo. Recent announcements at BrainShare Europe show that the company is interested in regaining its place as the leading identity management company (see this week’s Network World Identity Management newsletter for details).
As many of you tell me, and some of you tell me often, when there’s positive news about the company it should be noted. To that I’ll add that when there’s negative news it should be accurate.
