Novell tops estimates in second quarter

Novell Inc. (Nasdaq: NOVL) once again exceeded analysts' estimates in its second quarter Tuesday, earning $38.7 million, or 11 cents a share, on sales of $315.6 million. Its shares closed off 1/4 to 23 3/4.

First Call consensus expected the network software developer to earn 10 cents a share in the quarter.

The $315.6 million in sales represents a 20 percent improvement versus the year-ago quarter when it earned $19.3 million, or 5 cents a share, on sales of $262.2 million.

"Novell is on its way to becoming a growth company again," said CEO Eric Schmidt in a prepared release. "We had planned for growth, but the market's response to NetWare 5 has exceeded our plans."

The impressive second-quarter results mark the fifth-consecutive year-over-year earnings improvement for a company that was once written off for dead.

In the quarter, site licenses for its NetWare 5 product jumped 61 percent to $181 million.

Last quarter, Novell easily topped analysts' estimates and pushed the stock to a 52-week high of 28 1/8 in March.

Company officials said sales into Europe, the Middle East and Africa grew 35 percent to $105 million while sales into the Asia-Pacific region and Americas improved 23 percent and 13 percent, respectively.

"I feel very good that they'll make the number," says Joel Achramowicz, analyst with Preferred Capital Markets, ahead of the earnings report. "Netware 5 is selling very well. The customers I've spoken with over the last week and a half all speak positively about NDS 8. And there a lot of things coming out."

Novell's evolution to more of an IP network management company has helped it regain its luster on Wall Street.

Trading at just 8 1/8 in August, the stock is now rated a "buy" or "strong buy" by nine of the 10 analysts following it.

Sergio Non contributed to this report.