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Novell founded in 1979 as a hardware manufacturer, is currently specialized in enterprise operating systems such as SUSE Linux Enterprise and Novell NetWare. The company also provides identity, security and systems management solutions and collaboration solutions. The Waltham, Massachusetts-based company operates in four segments: Open Platform Solutions, Identity and Security Management, Systems and Resource Management, and Workgroup.
On average, 11 analysts polled by Thomson Reuters expect a profit of $0.06 per share for Novell's second quarter, in line with earnings reported in the prior-year quarter. Analysts have also forecast revenues of $217.99 million, a 7.5% decline from $235.67 million reported a year ago.
For the preceding first quarter, Novell reported a decline in profit as revenues were lower than a year ago. Net income was $10.7 million or $0.03 per share, compared with $16.8 million or $0.05 per share in the previous year. Non-GAAP net income declined to $24.4 million or $0.07 per share from $30.2 million or $0.09 per share in the year-ago quarter. Total net revenue reached $215 million in the first quarter, down from $231 million last year.
Novell had then indicated confidence on its long-term growth opportunities and committed to maintaining its target profitability levels.
Amongst others in the industry, International Business Machines Corp. (IBM | Quote | Chart | News | PowerRating) on April 20 reported a 1% decline in its first-quarter earnings, as lower tax rate, improved gross margins and tight cost control could not offset an 11.4% drop in revenues. The Armonk, New York-based technology giant's net income for the quarter was $2.30 billion or $1.70 per share, compared with $2.32 billion or $1.64 per share in the year-ago quarter. Total revenue was $21.71 billion, compared with $24.50 billion last year.
Earlier this month, IBM reaffirmed its fiscal 2009 earnings target, citing transformed business mix, significant annuity content, competitive cost structure, strong cash generation, and financial flexibility. The company's Senior Vice President and Chief Financial Officer Mark Loughridge, presenting a Financial Model and 2010 Roadmap at an Investor briefing in New York, said that the company was "confident in at least $9.20 EPS in 2009". While announcing the first-quarter results, the company had backed this earnings forecast.
Loughridge also stated that the company was "ahead of pace to deliver $10 to $11 EPS in 2010." The company aims to grow earnings around 9% above the forecast range for 2009. Meanwhile, revenue is expected to decline 7% in 2009 amid the current economic slump. The company also sees flat revenue in 2010.
Another rival, Microsoft Corp. (MSFT | Quote | Chart | News | PowerRating) has reported a 32% decline in profit for the recently closed third-quarter, hurt by weakness in the global PC market as well as $710 million in charges related to job cuts and investment write-downs. The world's largest software company reported net income of $2.98 billion or $0.33 per share, compared with $4.39 billion or $0.47 per share for the year-ago quarter. Redmond, Washington-based Microsoft's revenue declined 6% for the third quarter to $13.65 billion from $14.45 billion last year.
On May 5, Microsoft's Chief Executive Officer Steve Ballmer said in an e-mail sent to employees that the company is completing most of the 5,000 job cuts announced earlier this year faster than planned and may cut more jobs going forward.
In January, Microsoft had announced job cuts of up to 5,000 over the next 18 months, starting with 1,400 immediately, as part of its plan to control costs in light of the deteriorating global economic conditions. The company is "mostly but not all done with the planned 5,000 job eliminations," Ballmer said in the e-mail.
NOVL is currently trading at $4.38, down $0.01, on a volume of 3.10 million shares on the Nasdaq. For the 52-week period, the company's trading range was $2.97 - $7.10.
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