Novell shares slide on earnings news
The company's shares fall almost 20 percent after the software maker says its fiscal fourth-quarter profit fell below $1 million on slumping sales of its products used to run server computers.
The shares fell $1.44, or 19 percent, to close regular trading at $6.
Profit from operations in the period ended Oct. 31 was $940,000, or break even on a per-share basis, chief financial officer Dennis Raney said Tuesday. That matched the average estimate of four analysts polled by First Call/Thomson Financial. A year earlier, net income was $73.8 million, or 21 cents per share.
While sales will be little changed in the fiscal year ending next October, Novell said profit will improve as lower expenses boost margins. The company is trying to recover from slower sales to small businesses and increased competition from Microsoft and the Linux operating system.
The company has been reorganizing its sales force to focus on larger accounts and redesigning software for Internet use. Revenue fell 21 percent to $273.3 million from $344.6 million.
Goldman Sachs analyst Rick Sherlund cut his rating on the stock to "market perform" from "market outperform."
In the recent quarter, Novell took a pretax charge of $48 million related to the layoffs of about 900 employees, or 16 percent of its work force, announced in September. Including the charge, the company had a loss of $35 million, or 11 cents a share.
Novell announced results after the close of regular U.S. trading Tuesday.
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