Galaxy Watch 5 Review Specialty Foods Online 'She-Hulk' Review Disney Streaming Price Hike Raspberry Girl Scout Cookie $60 Off Lenovo Chromebook 3 Fantasy Movies on HBO Max Frontier Internet Review
Want CNET to notify you of price drops and the latest stories?
No, thank you

Novell upswing continues

The networking firm beats earnings estimates and posts its first appreciation in revenue since the fourth quarter of its previous fiscal year.

The turnaround at network software provider Novell continues, with the company posting the first appreciation in revenue since the fourth quarter of its previous fiscal year.

The networking software firm posted net income of $19 million, or 5 cents per share, for its fiscal second quarter, compared to a net loss of $14.6 million, or 4 cents per share, for the same period a year ago.

Novell's earnings beat consensus estimates by a cent, according to First Call.

Revenue for the quarter came in at $262 million, a $10 million increase over the company's first-quarter performance See related story: Will Novell find its niche? and a nearly $11 million drop from the same period a year ago. Taking into account the self-inflicted hit the company took to clear out inventories in its sales channel--forcing a massive drop in revenue in the third quarter of fiscal 1997--the company last boosted its revenue quarter-over-quarter during the third fiscal quarter of 1996.

The results also mark the third straight quarter that Novell has operated in the black.

"We made progress toward our objective of restoring revenue and earnings growth, and extended our leadership into the Internet market," Eric Schmidt, chairman and chief executive of Novell, said in a statement. "Having posted sequential revenue growth and the third consecutive improvement in earnings, our confidence is growing."

Novell's stock was up slightly near its 52-week high earlier this week due to expectations that the company might beat estimates.

Sales of the company's core NetWare operating system software accounted for $149 million for its second fiscal quarter, nearly 57 percent of the company's total. Sales from network services-related software such as GroupWise and ManageWise increased 7 percent to $72 million.

The company said revenue from enterprise-class customers grew 18 percent for the quarter, with significant sales to the likes of MCI Communications and Time Warner.

The boost in revenue comes as the company prepares for the launch of the next version of its flagship NetWare product, due this summer, which could significantly impact the future bottom line for the firm.

The financial state of the company represents the clearest indication that Schmidt, who was hired more than a year ago to right a sinking ship, has stabilized Novell's operations.

As a result, the company is receiving increasing interest from Wall Street. Merrill Lynch recently upgraded Novell from a "neutral" rating to "accumulate," and the brokerage expects the next release of NetWare to impact revenues in Novell's October quarter.

Others are hopeful that Novell can shed its image as a diminished player. Stephen Dube, an analayst with Wasserstein Perella Securities, said: "Although the current perception of Novell is that of a company that is no longer significant, we believe that this view is now beginning to shift toward Novell as a company with a role to play in today's Internet/intranet world."