* Novell's posts disappointing second quarter results
I know that a few of you don’t like it when I appear to get into discussions of Novell, the company, rather than Novell, the technologies, but every time I promise to avoid the so-called “political” issues something happens that causes me to stand, slack-jawed and ask the company, “What were you THINKING!?”
Novell last week reported financial returns for its second quarter. The numbers weren’t very good (revenue down, income down) and the stock dropped because the numbers weren’t as good as some Wall Street analysts had predicted (why is it that the stock, and not the analysts, suffer when the analysts get it wrong?).
What struck me, though, were Novell’s reasons for the drop in revenue. According to the story reported by Reuters (https://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=8607249): “Novell said its older networking software business was shrinking faster than expected.” Revenue from operating systems sales was down 25% over the same period last year.
“Shrinking faster than expected,” expected by whom? The biggest force driving people away from NetWare (a.k.a. “its older networking software”) isn’t Microsoft, Sun or Red Hat – it’s Novell. It has talked so long about how NetWare is old, dying – or already dead – that it has convinced huge numbers of users to plan and implement migrations away from it. That was done on purpose, by the way. But what didn’t happen is what Novell’s marketing folks hoped would happen – that NetWare accounts would migrate to be SuSE Linux accounts, or at least Open Enterprise Server (OES) accounts.
It’s probably true that OES hasn’t been shipping long enough to have a major impact on income, just yet – although rollout expenses would have helped create some of the quarterly red ink – but SuSE by itself can only be considered underwhelming in its impact. Only $8 million out of $45 million in operating system revenue was contributed by subscriptions to SuSE Enterprise Server.
Those numbers simply have to get very much better in the very near term if Novell and its products are to be considered viable alternatives moving forward.
