Novell Q3 results raise doubts over independent future

CEO Eric Schmidt leaves door open for takeover tongues to start wagging again. IBM sited as possible suitor.

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By  Peter Conmy Published  August 17, 2000

What a comedown for Novell, the grandfather of local area networking. Once a company powerful enough to push Microsoft around, Novell today is challenged to meet low Wall Street expectations and shoo off rumours of its dismemberment.

Wednesday, while Novell chairman and CEO Eric Schmidt reported third-quarter earnings one-fifth of last year's third quarter, he offered a perfunctory non-denial of rumours that Novell would be broken into several companies or bought outright by IBM.

"My feeling is that with our stock price low, it's important that we consider shareholder value. Are there ways in which we can 'advantage' our position through very legitimate and positive moves?

"But we don't have any plans that are specific enough at this time to talk about. So the answer, right now, is no," said Schmidt.

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Novell reported third-quarter revenue of $270 million and earnings of 3 cents a share.

While earnings beat the consensus-analyst forecast of 2 cents a share, according to First Call/Thompson Financial, it's far short of third-quarter 1999.

At that time, Novell reported revenue of $327 million and earnings on a diluted basis of 14 cents per share.

Steve Foote, president of the market research firm, says Novell's products are technically solid. The company just needs a couple more quarters to switch to an Internet-services company. Says Foote, "Transforming a company takes time."

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