Linux OS sales boost Novell

Excluding charges, Novell's profit for its fiscal fourth quarter was at the high end of Wall Street expectations. But the company, which does not give detailed financial forecasts, cautioned that it expects 2005 to be "another rebuilding year" as it shifts away from its reliance on sales of older networking software.

The company, which sells a version of the open-source Linux operating system, posted a fourth-quarter net income of $13 million, or 3 cents per share, compared with a net loss of $109 million, or 29 cents per share, a year earlier when it took one-time charges of $130 million.

Revenue rose to $301 million from $287 million. Its fourth quarter ended Oct. 31.

Excluding stock-based compensation, restructuring and other charges, Novell said it had a profit of $23 million, or 6 cents per share, in the fourth fiscal quarter, compared with a profit of $19 million, or 5 cents per share a year earlier.

Analysts, on average, had expected Novell to post a profit, excluding charges, of 5 cents per share on $304 million in revenue, according to forecasts compiled by Reuters Estimates.

Novell, based in Provo, Utah and Waltham, Mass., is moving away from its older networking related software toward Linux-based products and services to fuel future growth.

"We're doing that in a challenging IT market while our legacy product revenue has been going down," said Joe Tibbetts, Novell's chief financial officer.

Novell bought Linux software developer SuSE Linux earlier this year to sell more Linux software updates and support services to large companies, pitting it against Red Hat.

Novell also got a boost from a weaker dollar that boosted the value of its earnings from overseas by about $7 million compared with a year earlier.

Novell said it would receive, after transaction costs and tax, $438 million from its antitrust settlement with Microsoft announced last week. Novell had claimed that the software giant used its Windows monopoly to harm Novell's networking software business but settled the charges.

However, it filed a separate lawsuit against Microsoft over WordPerfect, a word processing program that it owned for two years in the mid-1990s.

Tibbetts said that the cash infusion, which would bring Novell's total cash balance to about $1.6 billion, would make it easier for Novell to make other acquisitions.

Novell will continue its transition toward a Linux-based product offering throughout 2005, Tibbetts said.

Analysts are projecting income of 22 cents per share for Novell's fiscal 2005 on revenue of $1.24 billion.

Novell's stock is down about 33 percent since the beginning of the year.

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