Novell Inc has reported its second consecutive quarter of profitability since chief executive Eric Schmidt announced his restructuring plans last May (CI No 3,170). The Provo, Utah company reported first-quarter net income of $14.1m, or $0.04 per share, when the First Call consensus was for just $0.02. The upside earnings surprise was aided by operating expenses that fell $45m year-over-year, and $20m consecutively, to $192m. Research and development spending was cut by $15m from the preceding quarter, mostly due to staff reductions. During the quarter, Novell’s headcount fell to 4,600 from 4,800. Schmidt says that the restructuring and cleanup of the channel was more difficult than he and his executive team had originally thought, but given the return to profitability and the stability that cost controls have brought, feels that Novell is relevant again. The company is confident of its continuing revitalization through its focus on solid interoperable products and a reconnection with the customer. No more restructuring is on the horizon, but share buy-backs and acquisitions aren’t near-term realities either. Revenue for the quarter was $252m, down 32.8% year-over-year. Revenues for the US and Europe were pretty much flat with the preceding quarter, while Asia revenues were hit by a 34% drop to $23m. The $14.1m represents a decline of 72.3% from last year’s first-quarter net income of $50.8m.
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