Novell's sales down as it prepares to sell up
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Quarterly revenues fell 6% for troubled systems vendor, reported to be in talks with potential acquirers
Sales at systems and software vendor Novell fell 6% to $204 million in the second quarter of its fiscal year, despite managing to increase its profits for the second quarter running.
Maintenance and subscriptions revenues derived from Novell's Security, Management and Operating Platforms division, which includes its SUSE version of the Linux open source operating system, was unchanged year-on-year at $109 million. Its second largest business unit, Collaboration Solutions, reported a 9% drop in sales to $72 million.
The one area which did see an improvement was Novell's Identity, Access and Compliance Management segment, where revenue was up 9% to $30 million.
The company's net income was up 25% on a constant currency basis, from $16 million to $20 million.
CEO Ron Hovsepian told investment analysts that Novell has a "healthy pipeline" and that the company would be focusing both its technology roadmap and partner ecosystem around the industry shift towards cloud computing.
Novell's cloud strategy is to partner with service providers including Verizon in the US and Vodacom in Africa, which resell hosted versions of its security tools. Speaking to Information Age at the company's recent BrainShare customer event in Amsterdam, Hovsepian explained that these partnerships not only boost revenue but also help to enhance the company's brand, something that has suffered of late, he admitted.
"There has been confusion about the role and the identity of the company in the industry," he said, "but I think we've done a good job of putting a stake in the ground saying what we're going to be. Now we just have to be boringly consistent on staying with it in order to build that brand."
The Wall Street Times newspaper reported earlier this month that Novell is in talks with as many as 20 potential acquirers, most of which are private equity firms. In March 2010, Novell rejected a bid from Elliott Associates, saying it undervalued the company.
