When I was in the railroad business I used to say, ‘You know you can’t get the freight to the location if you don’t put the tracks down,’ said Novell CEO Jack Messman in a conference call. And so we’re laying tracks right now in many, many different ways in the company and I think we’re positioning ourselves with regard to applications that work on top of Linux.

The Waltham, Massachusetts-base company posted a $16m loss, or 4 cents a share, versus $15m, or 4 cents, a year earlier. For the quarter ended April 30, revenue rose slightly to $297m from $294m. Foreign currency exchange rates boosted revenue by roughly $8m boost and profit by $2m, year-over-year.

However, the company saw continued weakness in Europe, where revenue fell 11% from a year ago. Newly appointed president of worldwide field operations, Ron Hovsepian, said he has spent the first 90 days on the job working to improve productivity, particularly in Europe, Novell’s second-largest market next to North America.

While we are not yet done, we have made significant progress, he said in a conference call.

The fruits of its transition investments likely will not show until next year, Messman said. By year’s end, he said the company will complete the refocus of its sales reps in North America (Novell currently has completed about 75%) and should be 50% complete in EMEA.

Messman said, in response to some analyst reports, There is no brain drain going on at Novell.

While Messman said pricing pressures are more due to client budget concerns than competitive issues, he said expects competition from Microsoft, especially related to Linux, to increase dramatically in the coming months.

Messman said in cases where Microsoft is the incumbent, Microsoft has been particularly aggressive on pricing … And in some situations have taken the prices down to almost zero when you consider all the things they throw into the equation, including free consulting.

Novell saw $8m revenue from subscriptions to its SUSE Linux Enterprise Server, which totaled 19,000 units for the quarter, down from 21,000.

I wouldn’t read a lot into the fact that we’ve been flat for a couple of quarters, Messman said, because let’s face it, in 14 months we’ve duplicated what Red Hat took eight years to do. And now we’re ready and so I think we’re very optimistic about the future.

On demand for Novell’s Open Enterprise Server, Messman said existing customers are taking a little longer to renew, in part due to competitors seizing the opportunity to convince them not switch products instead. He also said some large deals closed after the quarter.

How many NetWare customers will migrate to OES remains to be seen, he said, but stressed, if somebody is satisfied with NetWare, they can stay on NetWare. If they want to change over they can as licenses come up for renewal. It’s hard to predict at this stage.

Despite having $1.6b in cash and short-term investments, versus $1.7bn on January 31, the company is not considering the possibility of a share buy back or dividend.

Jefferies & Co analyst Katherine Egbert said it appears that if the company made a buy back using 20% of its cash it would be immediately accretive.

A billion dollars is a lot of money, she told management on the call.