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Novell posts unexpected profit

The networking software maker posts a surprise profit in its fiscal first quarter, but warns that weakness in the consulting space could hurt revenues in the short term.

ron foster Networking software maker Novell on Thursday posted an unexpected 2 cent profit in its fiscal first quarter, but warned that weakness in the consulting space would hurt revenues in the short term.

Novell shares, which finished 2 cents higher at $4.09 in regular Nasdaq trading, slipped as low as $3.85 after the company said it sees lower second-quarter revenue due to "additional weakening in the IT (information technology) services consulting space," Novell Chief Financial Officer Ron Foster told Reuters.

Novell--which has been shifting its focus to consulting since it purchased Cambridge Technology Partners last summer--posted net income of $8.4 million, or 2 cents a share for the quarter ended Jan. 31, compared with a net loss of $7.8 million, or 2 cents a share in the year-earlier quarter, which did not include Cambridge operations.

Revenues rose to $271.1 million from $245 million a year earlier. Results from the 2002 fiscal quarter included $58 million in revenue from Cambridge.

Consulting revenues were down more than expected for the latest quarter, particularly in North America, while software revenue related to Novell's network access, security and user provisioning products increased.

Provo, Utah-based Novell had predicted that it would break even before charges on revenues of between $265 million and $275 million. The three analysts surveyed by Thomson Financial/First Call, on average, had projected a loss before charges of 1 cent a share.

For the period ended April 30, Novell expects to break even on an earnings-per-share basis--before restructuring and integration costs--on revenue of $255 million to $265 million.

Foster estimated 2002 revenue in excess of $1.06 billion and said he sees Novell's software and consulting businesses stabilizing in the second half of fiscal 2002.

Story Copyright © 2002 Reuters Limited. All rights reserved.