Novell Posts Loss, Will Cut 1,000 Jobs

Novell Inc., hurt by declining sales of its computer-networking software, Wednesday reported an unexpected loss for its latest fiscal quarter and said it plans to cut 1,000 jobs in coming months.

The job cuts--equal to 18% of the work force at Novell, the second-biggest publisher of personal computer software behind Microsoft Corp.--would rank among the biggest ever in the computer software industry.

Novell said it plans to reduce inventory of unsold products by not making shipments to distributors in the current quarter. The move will result in a third-quarter loss and substantially lower revenue.

Provo, Utah-based Novell writes computer programs that manage the flow of information between personal computers in a network. In the last two years, the company has lost many of its customers to Microsoft’s Windows NT networking software.

Novell said in a statement that the layoffs will help it cut costs.

After the cuts, “Novell will be a more streamlined, tightly managed and responsive organization,” said Chief Executive Eric Schmidt.

The company will take a third-quarter charge of $25 million to $35 million to pay for the layoffs.

Novell said it had a loss of $14.6 million, or 4 cents a share, in the quarter ended April 30, compared with a loss of $55.4 million, or 15 cents, a year earlier. Sales rose to $273.1 million from $188.2 million.

Investors had expected Novell to report a profit of 10 cents a share, according to Zacks Investment Research.

Novell attributed the loss to disappointing sales of its flagship product and lower revenue from PC makers that pack its software with their machines.

Novell’s stock was unchanged at $8.06 on Nasdaq. It reported results after most trading had ended for the day.