Novell Inc is getting back into Wall Street’s good books. Morgan Stanley upgraded the stock and NationsBanc Montgomery Securities initiated coverage yesterday when the company reported first- quarter net income up 105% at $28.9m over $14.1m on revenue which increased 13% to $285.8m from $252m. Earnings per share were $0.08, hitting the First Call consensus right on the nose. It’s clear CEO Eric Schmidt is having some success refocusing the company around its leading Novell Directory Services; the company is now saying that the three directory-related businesses contributed 88% of its revenue in the first quarter, and 27% more than in the prior period. Directory-enabled NetWare server sales were $146m, up 16% from the first quarter of 1998.GroupWise, ManageWise and ZEN revenues were up 50% at $53m. Directory- enabled infrastructure products – including NDS for NT and BorderManager brought in 68% more than last time at $15m. Service and training was worth $37m. Non-directory products declined 35% to $35m and now account for 12% of revenue. US revenue was up 9% at $156m, EMEA was up 31% at $94m, Asia was flat at $22m and the Americas down to $14m. Corporate, reseller and integrator license sales were worth $148m. The company’s balance sheet shows $1bn in cash and short-term investments.