DOW JONES NEWSWIRES
Novell Inc.'s (NOVL) fiscal second-quarter profit climbed 28% as lower operating expenses more than offset a drop in revenue and margins.
The software company also projected third-quarter revenue of $205 million to $210 million, compared with the $210 million projected by analysts polled by Thomson Reuters.
Like many of its peers, Novell, which works with open source and proprietary software, is trying to control costs as revenue falls. The company is trying to boost the presence of its Linux-based operating system, Moblin, in low-end netbooks, which have lately become hot items.
Novell planned to accept bids from potential buyers earlier this month, people familiar with the matter told The Wall Street Journal, kicking off a process that will likely result in a sale of the company. The company put itself on the block in March, after hedge fund Elliott Associates LP made an unsolicited offer of $5.75 per share. Novell rejected that offer, which valued the company at around $2 billion, but said it would entertain other bids.
For the quarter ended April 30, Novell reported a profit of $19.9 million, or 6 cents a share, up from $15.6 million, or 5 cents a share, a year earlier. Excluding investment write-downs and other items, earnings fell to 7 cents a share from 8 cents, in line with the 7 cents projected by analysts.
Revenue dropped 5.4% to $204 million, basically in line with the company's downbeat February projection of it being "similar" to the first quarter's $202.4 million.
Gross margin slid to 79.8% from 80.1% as total operating expenses dropped 6.5% to $142.8 million.
Maintenance and subscriptions revenue, which makes up the bulk of the company's total, decreased 2.8%. Revenue from software licenses was down 8.5%, while services slid 17%.
Shares were down 0.9% at $5.85 in after-hours trading. The stock is up 42% this year.
-By John Kell and Lauren Pollock, Dow Jones Newswires; 212-416-2356; firstname.lastname@example.org