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Novell shares slide following 3Q results

Novell shares fell 1 1/16, or 10 percent, to 9 7/8 Thursday, one day after it narrowly beat analysts' estimates in its third quarter.

In the quarter, Novell (Nasdaq: NOVL) pocketed $8.6 million, or 3 cents a share, on sales of $270 million.

First Call Corp. consensus expected the software developer to earn 2 cents a share in the quarter.

The $270 million in sales marked a 17 percent decline from the year-ago quarter when it raked in $49.3 million, or 14 cents a share, on sales of $327 million.

Company officials said they'll take further steps in the fourth quarter to pare expenses but didn't provide any specifics. As for revenue growth, Novell executives said they wouldn't give any guidance. It was clear they weren't expecting much.

It will also buy back up to $500 million in stock this year.

Earlier this week, Novell shares moved up 13 percent on rumors of a possible takeover by IBM (NYSE: IBM). Red Herring reported that Novell was prepping to spin off its key businesses.

"People love to generate rumors," CEO Eric Schmidt told analysts during a conference call Wednesday. "It's important to consider shareholder value, but we don't have any plans specific enough to talk about."

After reporting disappointing sales and earnings in its second quarter, Novell reorganized its sales and marketing departments to focus more on new geographies, solution-selling and channel support.

In the second quarter, Novell earned $31 million, or 9 cents a share, on sales of $302 million.

This time around, Novell watched its U.S. sales fall 12 percent from the year-ago quarter to $160 million. Sales into the Europe, Middle East and Africa slid 30 percent to $70 million while sales to the Asia-Pacific region dropped 8 percent to $22 million.

Novell's service, education and solutions sales rose 13 percent to $56 million. Net services application sales fell 3 percent to $78 million and its NetWare server software sales plunged 29 percent to $120 million.

Its shares moved up to a 52-week high of 44 9/16 in February before plunging to a low of 7 7/8 in May.

Six of the 11 analysts following the stock rate it a "buy" while the other five call it a "hold."

First Call Corp. consensus expects Novell to earn 21 cents a share in the fiscal year.

  • National Computer Systems (Nasdaq: NLCS) also topped analysts' estimates in its second quarter, earning $16.7 million, or 50 cents a share, on sales of $204.7 million.

    First Call Corp. consensus expected the education services company to earn 49 cents a share in the quarter.

    Its shares closed up 1/16 to 72 5/16.

    In July, British media group Pearson PLC (NYSE: PSON) agreed to buy the company for $2.5 billion in stock.