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; lauren.pollock@dowjones.com