Novell Layoffs Coming?

Lauren Rudd of NewForge writes:

Novell may lay off 10 to 15 percent of its staff as early as Monday, according to sources close to the company. It appears that one or more of the larger shareholders in the company are becoming worried about Novell’s future.

The shareholders have suggested that Novell divest itself of its consulting group and GroupWise division, while at the same time instituting personnel cuts across the board to bring expenses more in line with revenues. Although NetWare engineers would likely be at risk if that scenario were to play out, Novell has a substantial investment in those people and would probably retrain them to work with its Linux products rather than lose them.

A call to Bruce Lowery, Novell’s director of public relations, brought the standard “We do not comment on rumors or speculation” reply. However, Lowery did point out that management’s position that a corporate restructuring was necessary is no secret. In fact, Lowery said that management made that point quite clear during its discussion of third quarter results.

Clearly the company has to do something if it is to survive long-term. On August 4, in “Are the wheels coming off Novell’s wagon?” I wrote that although Novell received some temporary relief as a result of cash settlements from legal suits, its operating performance was declining.

If you dig into Novell’s 2004 10K filing with the Securities and Exchange Commission (SEC), the problem is no secret to management. According to filing, the company said that its NetWare revenue stream continues to deteriorate, declining by $36 million in fiscal 2004, excluding the impact of favorable foreign exchange rates.

To try and stem the decline, Novell indicated that its next generation of NetWare will give customers the opportunity to migrate to Linux and open source solutions while maintaining the enterprise-class functionality to which they have become accustomed.

[Read Novell Layoffs Coming? at NewsForge]

[tags]lauren rudd,novell layoff,bruce lowery,sec[/tags]