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Novell to Cut 600 Jobs in Restructuring

Posted by iMark - 2005-11-05

WALTHAM, Mass. - Business software maker Novell Inc. will cut about 600 positions, or more than 10 percent of its work force, by January as part of its restructuring efforts to concentrate on core strategic areas such as the Linux and open-source markets.
As the company puts more focus on its core businesses, Novell's board authorized management and its financial adviser to explore strategic options for Celerant, Novell's consulting unit. The company has previously said that it intends to separate Celerant from Novell when market and other conditions are appropriate.

In a press release Wednesday, Novell said it expects to book a restructuring charge of $30 million to $35 million in its fiscal fourth quarter ended Oct. 31.

The restructuring will reduce annual run-rate expenses by more than $110 million, Novell said, and the full effect of the cost reductions is expected to be realized in the first quarter ending Jan. 31.

The Waltham-based company plans to concentrate its business in the Linux, open source and identity and resource-management markets.

"While the cost reductions will result in some lost revenue opportunities, the net result is expected to be improved profitability as we enter fiscal year 2006," Chief Financial Officer Joseph S. Tibbetts Jr. said in the release.

In the most recent third quarter, Novell's earnings fell to $2.1 million from $23.4 million as revenue fell almost 5 percent and operating expenses increased.

Novell shares were unchanged Wednesday at $7.47 on the Nasdaq Stock Market.

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