Novell Inc has returned to profit after two consecutive quarters of net losses and restructuring activities. The Provo, Utah network software provider posted net income of $7.2m, or $0.02 per share, edging out the First Call consensus of a penny, but falling far short of the $59m ($0.17 per share) it pocketed a year ago. Revenue for the quarter fell 29.8% to $269.3m, close to the $273m it reported in the second quarter, before chief executive Eric Schmidt began the process of cleaning out the company’s overstuffed channel. The inventory write-downs and the axing of 1,000 jobs (CI No 3,170) led to restructuring charges of $55.3m in the third quarter and a net loss of $227.8m. The second-quarter loss was $22.5m. Schmidt asserts that demand for Novell’s products came back strong in the fourth quarter across the company’s entire distribution channel – including resellers, licensing programs and OEMs – and proves that the changes are effecting significant recovery. Schmidt said last week at Comdex that the channel is now super clean and we’ll keep it that way (CI No 3,295). Licensing program revenue hit its highest point ever, at $99m, or 37% of the total, while resellers accounted for 54%. For the year, net loss was $78.3m on revenue down 26.7% at $1.01bn, compared to net income of $126m, or $0.35 per share, last year. Yearly results include the previously mentioned restructuring charges of $55.3m, as well as $18.4m for 1996. 1996 yearly results also include a one-time gain of $19.8m. Cash and short-term investments stood at $1.03bn at the end of fiscal 1997, up slightly from a year ago, and Schmidt promises that the year ahead will be one of further investment.