The company’s Netware and GroupWise businesses shrank as Novell attempted to complete its transition into a Linux and software services company.
For the three months to October 31, software licensing declined 8.2% to $64.6 million, while maintenance and services grew 9.1% to $236 million. For the year, new license revenue dipped 10.1% while services increased 10.38%,
NetWare continued its slide, falling 13% year on year and 8% for the quarter, a lower quarterly rate of decline than in previous years.
Company chief executive Jack Messman said while Novell experienced price pressure from the Linux community, the real competition came from Microsoft. Just this week, Microsoft announced a NetWare migration program to move Novell’s customers from the ageing operating system to Windows Server 2003.
Messman said Novel didn’t expect any major change as a result of Microsoft’s promotion activities, but Novell does expect abnormally high R&D costs during 2005 as the company continues migrating legacy products like eDirectory to non-NetWare platforms.
Novell would not specify what level of R&D it expects next year. However, Messman said Novell has positioned itself during 2004 to take advantage of the Linux and identity management growth markets, competing against IBM, Microsoft and Sun Microsystems in identity management and offsetting declining license revenue.
For the quarter, Novell’s total revenue grew 4.85% to $300.6 million, turning a $109 million net loss into a $13.2 million profit, with earnings per diluted share of $0.03, up from a loss of $0.29. For the year, Novell reported 5.46% increase in revenue to $1.16 billion, producing a $57.18 million profit over the previous year’s $161.9 million loss. Earnings per diluted share came in at $0.08, reversing the $0.44 loss.
