Novell president quits

Novell (NOVL) president Joe Marengi today announced his resignation, marking the highest-ranking departure among the 1,000 workers losing their jobs at the struggling networking software company.

Marengi will help with the company's reorganization through the end of the month. Company chairman and chief executive Eric Schmidt will temporarily assume Marengi's duties.

It has not been determined whether the role of the president will be filled, Marengi said.

"We're still doing functional reorganizing underneath, and once it's laid out Eric will determine the top layer of the company," Marengi said.

He added that the decision to leave was "100 percent" his initiative. "I recruited Eric and knew I was recruiting someone who would be over me. I've been here seven years and it was time to do something different."

Marengi, who guided the company on an interim basis while a successor to former CEO Robert Frankenberg was found, will be the highest-ranking employee to leave Novell since the advent of Schmidt and his bid to rein in costs and focus product development at the Provo, Utah-based firm.

"During more than seven years of service to the company, Joe was a tremendous performer who made significant contributions to the growth of Novell as a networking leader. After being promoted to run the company, Joe did the right thing in advancing the concept of 'one Novell' that pulled the organization together around a single networking vision," said Schmidt.

Marengi cited two roles he played during his tenure at Novell as particularly important: "I put together a world-class sales organization and structure outside the United States."

He noted that before the WordPerfect acquisition, the sales operations he oversaw outside the United States accounted for more than 50 percent of total sales.

And he pointed to his six-month role as president, in which he developed the "one Novell" concept, in an effort to eliminate a corporate structure that focused on four product groups.

In sizing up where he may have gone wrong, Marengi pointed to meshing his sales experience with the president's role.

"I was overly optimistic in our expectations for the quarter, which is common for a sales guy," Marengi said. "But I don't have misgivings about the things that I did while I was there. I gave it a lot of my life."

The company posted a net loss of nearly $15 million for the just-completed quarter--even worse than it had warned Wall Street earlier of earlier in the period.

The departing executive said he expects to announce his next step in the coming weeks, saying only that it will be in the high-tech industry.

Marengi was seen by many as an important link to day-to-day operations at Novell, capable of overseeing the minute details of running a billion-dollar company while Schmidt grew comfortable in his management role. Analysts have noted Schmidt's lack of administrative experience as a potential flaw in his CEO profile.

"Schmidt did show [Marengi] some support early on," observed Jamie Lewis, president of the Burton Group.

In several interviews upon Schmidt's arrival from Sun Microsystems, Marengi was quick to note that he was leading the charge to bring the Sun executive to the company after it was clear that he was not thought of as a long-term solution.

Lewis said it will be interesting to see what happens next, since Sun has a business model that is "diametrically opposed" to Novell's channel-based approach and the new CEO is not familiar yet with the inner-workings of Novell. "Marengi seemed to have a good handle on that," he added.

Schmidt, who arrived at the company in April with great expectations after a long stay as technology guru at Sun, has quickly seen momentum from his introduction as Novell's savior thwarted by another wave of bad financial results.

As a result of the poor numbers, Schmidt acknowledged that executive performance has "not been good" during a financial conference call last month, noting that 30 percent of the Novell executive team had left, been fired, or been demoted.

Novell is seeing increased competition from Microsoft Windows NT Server in the corporate networking marketplace and in the small-business sector that used to be the company's bread and butter.