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Novell Reports Second Fiscal Quarter 1997 Results |
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PROVO, UT., -- May 28, 1997 -- Novell, Inc. (NASDAQ:NOVL) today reported revenue of $273 million and a net loss of ($0.04) per share, for its second fiscal quarter ended April 30, 1997. In the year-earlier quarter, Novell recorded revenue of $188 million and a loss of ($0.15) per share. Second-quarter 1997 results reflect disappointing sales of boxed software products to distributors and lower licensed revenue of certain older products to Original Equipment Manufacturers (OEMs). These two distribution channels account for approximately 54 percent of Novell revenue. Sales from the company's multi-product, direct and channel license programs increased 46 percent year-over-year to account for 34 percent of revenue. This growth reflects continuing demand for IntranetWare server operating systems in the large network enterprise market. Given these results and competitive pressures in the small network market, Dr. Eric Schmidt, Novell chairman and chief executive officer, said: "Novell is taking corrective measures to realign its resources, better manage and control its business, and more rapidly implement the company's strategies to become a leading Internet/intranet software provider. "In the third fiscal quarter, the company plans to reduce its workforce by approximately 18 percent, or approximately 1,000 employees. Novell will be a more streamlined, tightly managed, and responsive organization totaling about 4,800 employees worldwide. "In addition, we intend to reduce product inventories in our distribution channels in the third quarter. Current levels of product inventories are no longer appropriate as Novell's business continues to experience competitive pressures and to shift from a high reliance on boxed software distribution to a changing mix of boxed products and multi-product licenses. Our objective is to get ahead and stay ahead of these distribution changes." Novell will implement this inventory reduction by not shipping additional products to distributors in the third quarter, thus decreasing revenue for the quarter by a corresponding amount. The company will assist resellers to meet customer needs by appropriately matching existing inventory in the channel to specific product demand around the globe. In the second fiscal quarter of 1997, this distribution channel accounted for approximately $100 million of Novell revenue. The decision to withhold shipments to distributors is expected to result in an operating loss in the third fiscal quarter. The workforce reduction is estimated to yield a one-time restructuring charge ranging from $25 million to $35 million in the third quarter, principally comprising severance and excess facilities costs. "The corrective actions we are taking will not affect the delivery of previously announced products, including BorderManager and Novell Directory Services for Microsoft NT Server," said Schmidt. "Our plan is to enable Novell to rapidly deliver the next generation of network services software. One year from now, look to Novell to be a pure Internet leader in the expanding multi-billion dollar network services software market." On the balance sheet, cash and short-term investments were $1.0 billion at the April 30 close of the second quarter, slightly higher than fiscal year-end 1996. Founded in 1983, Novell (NASDAQ:NOVL) is the world's leading provider of network software. The company offers a wide range of network solutions, education, and support for distributed network, Internet, intranet and small-business markets. Information about Novell's complete range of products and services can be accessed on the World Wide Web at http://www.novell.com. Forward looking statements in this release are made under the Safe Harbor Reform Act of 1996. These statements are based on current expectations and actual results may differ materially due to risks, uncertainties, and other factors. Additional information covering factors that could cause results to differ materially from projected statements can be found in Novell's 10-K and 10-Q filings, as well as the annual report.
Press Contact:
Novell, Inc.
Consolidated Unaudited Condensed Statements of Operations
(In thousands, except per share data)
Fiscal Quarter Ended Six Months Ended
Apr. 30, Apr. 27, Apr. 30, Apr. 27,
1997 1996 1997 1996
__________ __________ __________ __________
Net sales $ 273,107 $ 188,180 $ 647,954 $ 626,099
Cost of sales 77,175 68,614 153,146 164,625
__________ __________ __________ __________
Gross profit 195,932 119,566 494,808 461,474
Operating expenses
Sales and mktg. 116,068 127,292 243,958 250,757
Product dev. 68,442 69,723 140,197 148,356
General and
admin. 39,517 34,731 77,248 73,269
Restructuring
charges -- -- -- 18,442
__________ __________ __________ __________
Total operating
expenses 224,027 231,746 461,403 490,824
__________ __________ __________ __________
Income (loss)
from
operations (28,095) (112,180) 33,405 (29,350)
Other income
(expense)
Investment
income 9,921 11,257 26,535 26,157
Gain on sale
of assets -- 19,815 -- 19,815
Other, net (3,506) (2,138) (6,343) (4,288)
__________ __________ __________ __________
Total other
income
(expense) 6,415 28,934 20,192 41,684
__________ __________ __________ __________
Income
before taxes (21,680) (83,246) 53,597 12,334
Income taxes ( 7,046) (27,887) 17,419 4,132
__________ __________ __________ __________
Net income $ (14,634) $ (55,359) $ 36,178 $ 8,202
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Weighted average shares
outstanding 347,904 362,442 347,499 367,013
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Net income
per share $ (0.04) $ (0.15) $ 0.10 $ 0.02
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Novell, Inc.
Consolidated Unaudited Condensed Balance Sheets
(In thousands)
ASSETS April 30, October 26,
1997 1996
__________ __________
Cash and short-term
investments $1,044,106 $1,024,755
Receivables, net 332,507 452,327
Inventories 18,400 16,837
Prepaid expenses 70,914 59,009
Deferred income taxes 72,223 37,831
___________ ___________
Total current assets 1,538,150 1,590,759
Property, plant
and equipment, net 399,598 394,684
Other assets 57,152 64,023
___________ ___________
Total assets $1,994,900 $2,049,466
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 71,570 $ 96,933
Accrued compensation 41,554 54,731
Accrued marketing
liabilities 45,045 48,402
Other accrued
liabilities 84,750 118,133
Income taxes payable 21,872 --
Deferred revenue 52,117 46,573
___________ ___________
Total current
liabilities 316,908 364,772
Minority interests 16,171 17,035
Put warrants 19,750 52,150
Shareholders' equity 1,642,071 1,615,509
___________ ___________
Total liabilities and
shareholders' equity $1,994,900 $2,049,466
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