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Novell Q1 meets earnings forecasts, misses revenue estimates

Novell (Nasdaq: NOVL) met the consensus estimate in the first quarter.

After market close Thursday, the network software vendor reported fiscal first quarter net income of $45 million, or 13 cents per share. That was in line with the forecast produced by First Call's survey of nine analysts.

Strong November and December sales combined with a January slowdown resulted in first quarter revenue of $316 million, an 11 percent improvement year-over-year. The quarterly sales figure was 2 percent below what analysts were forecasting, said CFO Dennis Raney told Reuters.

Operating margin improved to 14.7 percent from 12.7 percent a year earlier.

"I would describe it as a well-managed quarter," Raney said. "We're a bit below the Street's revenue expectations but cash flow is excellent and we took more shares off the table with the buyback program."

Revenue from Novell's flagship directory-enabled NetWare software gained 6 percent year-over-year to $154 million in the first quarter. Directory-enabled services applications generated 10 percent growth to $80 million. Services revenue grew 37 percent to $50. Older, pre-directory product revenue went up 4 percent to $32 million.

U.S. revenue rose to $166 million, up 6 percent from the year ago period. Revenue from Europe, the Middle East and Africa picked up 6 percent to $99 million. Asia Pacific revenue increased 22 percent to $27 million. Non-U.S. Americas revenue rose 72 percent ot $25 million.

The company spent $89 million to buy back 3.7 million shares in the first quarter. Since August, Novell has spent $288 million to repurchase 13 million shares.

Raney said he's comfortable with the current First Call estimate calling for a second quarter profit of 17 cents per share on revenue of $369 million.

Shares of Novell advanced 2 5/16 to 43 1/16 in Thursday's regular trading prior to the earnings report. Among nine analysts polled by Zack's Investment Research, seven maintain some kind of "buy" rating on the stock and two have the equivalent of "hold" advisories.

-- Reuters contributed to this report.>