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Novell is Back Losing Money When This Time Last Year It Made Money

After suddenly canceling its earnings release last week because - come to find out - the SEC has been poring over last year's 10-K and this year's Q2 10-Q since this summer, whatever mysterious "accounting matters" provoked the agency's review just as suddenly got resolved and Novell posted its Q4 results after the market closed Thursday.

Novell hinted the SEC's concerns might have had something to do with Novell's admittedly complicated arrangement with Microsoft, which at the end of year one was said to have realized $122 million, 51% of their bogie.

Anyway, Novell lost $17.9 million, or five cents a share, on revenues up 5% to $244.9 million, a figure that excludes $6 million in revenue from its Swiss-based breakeven consulting unit, which it agreed to sell during the quarter, costing it three cents a share.

A year ago Novell made $19.9 million, or five cents a share.

Wall Street was expecting four cents to the good on revenues of $242.2 million.

For the full fiscal year 2007, Novell lost $44.5 million, or 13 cents a share, on revenues of $932 million.

Novell, still in a restructuring mode that will cost $15 million-$15 million more than anticipated and, contrary to what it has said, run into fiscal 2008, won't give quarterly guidance but it did say that revenues for this year should be between $920 million and $945 million - noticeably less at the low end than it did this year - and a non-GAAP operating margin of 7%-9%. In after-hours trading it was down 11.27% or 80 cents to settle at $6.30.

The revenue projection retracted year-over-year apparently because the company's reorganization of its services side. It still expects product revenues to advance; it would like them to be better than the market. Heck, it would like to take market share.

In Q4, Novell saw revenues of $23 million from what it calls its Open Platform Solutions, $22 million from Linux, up 69% year-over-year. Linux invoicing was $46 million during the quarter, up 108% year-over-year.

Revenue from Identity and Security Management was $33 million, of which Identity and Access Management was $30 million, up 27% year-over-year. Revenue from Systems and Resource Management was $36 million, up 5% year-over-year. Workgroup revenue was $88 million, up 1% year-over-year.

Novell CEO Ron Hovsepian claimed to be "pleased with our overall results. While undergoing transformational change, we grew revenue and exceeded our operating targets. We are on the right path to long-term, sustainable profitability."

To get there, Novell wants a couple more strategic global partners

Novell had $1.9 billion in the bank on Halloween, up from $1.5 billion last year. Total deferred revenue was $768 million at the end of the fourth fiscal quarter, up $341 million, or 80%. Cash flow from operations was $77 million for Q4, compared to $62 million last year.

© 2008 SYS-CON Media Inc.