Novell: Finally making some real money from Linux

The software maker turns in a good quarter, generating respectable revenues from its version of the penguin-faced operating system. It's about time, Matt Asay says.


Novell finally has managed to deliver a good quarter. Not exceptional, but solid. In a quarter when Novell saw anemic growth in most of its businesses (or a loss, in the case of its Workgroup unit, which clearly needs more steam than its announced (but still undelivered) competitor to Microsoft's Sharepoint), Novell's Linux business grew last quarter by 77 percent more than its size in the third quarter of 2006.

It's about time.

The numbers are still relatively small ($21 million), but any progress is progress. Importantly, the word on the street is that Microsoft is not proving to be a great distribution partner (go figure!). This means that (gasp!) Novell is actually managing to sell its Linux value, not just making silly patent deals.

Sure, the patent deal between Microsoft and Novell was a deal winner at Wal-Mart Stores and undoubtedly a few others. But I would argue that Microsoft has done more harm than good to Novell's Linux business. Why not cut it adrift?

From the press release:

For the quarter, Novell reported net revenue of $243 million, compared to net revenue of $236 million for the third fiscal quarter 2006. The loss from operations for the third fiscal quarter 2007 was $10 million, compared to a loss from operations of $40 million for the third fiscal quarter 2006.

The loss available to common stockholders from continuing operations in the third fiscal quarter 2007 was $3 million, or $0.01 loss per common share. This compares to a loss available to common stockholders from continuing operations of $17 million, or $0.05 loss per common share, for the third fiscal quarter 2006....

For the third fiscal quarter 2007, Novell reported $22 million of revenue from Open Platform Solutions, of which $21 million was from Linux Platform Products, up 77 percent year-over-year. Linux Platform Products invoicing was $38 million, up 95 percent year over year.

Revenue from Identity and Security Management was $30 million, of which Identity and Access Management was $27 million, up 2 percent year over year. Revenue from Systems and Resource Management was $35 million, up 4 percent year over year. Revenue from our Workgroup business unit declined 2 percent, from the year-ago period, to $83 million.

Good for you, Novell. Now you just need to ditch the ballast that you call Systems and Resource Management and Identity and Security Management, and really grow. At the very least, you could stop rewriting Sitescape and dump Workgroup.

In most businesses, 2 percent and 4 percent increases are embarrassments. You have the opportunity to get rid of them.

Tech Culture
About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.


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