Novell to cut 1000 jobs

Novell is expected to cut up to 1,000 jobs this month in an attempt to restore its ailing financial strength. According to US reports, the server software firm will announce a cull of around 20% of its 5,800 workforce by the end of this month, the close of its financial year.

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By  Chris Whyatt Published  October 30, 2005

Novell is expected to cut up to 1,000 jobs this month in an attempt to restore its ailing financial strength. According to US reports, the server software firm will announce a cull of around 20% of its 5,800 workforce by the end of this month, the close of its financial year. A heavy hint to Novell’s plans was givn by chief executive Jack Messman in a regulatory filing released this month. “Our cost structure will be better aligned to our strategy as part of our 2006 fiscal year planning,” he admitted. “I think we still need to make some operational enhancements to our business and to our corporate functions and in the field, which will lead to further cost reductions and efficiencies,” he added. Messman was responding to concerns raised by one of Novell’s major shareholders, Blum Capital Partners, which has urged the company to dramatically cut expenses, put greater emphasis on Linux, and to sell several divisions. According to US newswire CNET, which cited sources close to the company, as well as the job cuts Novell is also looking to pull back from regions where it hasn’t been especially successful, leavig sales to business partners. Within the Middle East, Almasa Network Solutions, Mindware, Aptec and ValueSys are among the value-added distributors for Novell products. Novell had declined to comment aside from a corporate statement saying: “We are very committed to working with our shareholders and we take their concerns seriously.” Novell Middle East was unavailable for comment at the time of going to press. In August Novell reported third-quarter results in which revenue dropped 5% to US$290 million. Net income also drop-ped 91% to $2.1 million, putting the company under tremendous financial pressure. In a regulatory filing, Blum’s managing partner Colin Lind and partner Greg Jackson wrote to Novell: “We are deeply concerned about the direction and pace you and the board are currently taking and have been dissatisfied with the company’s results.” “Given the company’s recent weak operating performance, we believe that the majority of Novell’s shareholders share our discontent. Our conviction is firm in the future promise of the company. The question is whether the current management and board will execute,” they added. Once one of the giants of the server operating market, Novell has struggled in recent years. Having seen sales of its NetWare operating system lose out to Microsoft’s product line-up, the company has sought to transform itself, embracing open-source software, chiefly the Linux operating system through its US$210 million acquisition of SuSe Linux in 2004.

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