Novell posts a profit as sales shrink

Novell Inc., which sells networking software and computer-consulting services, reported a second-quarter profit as sales declined. Results this quarter may miss analysts' estimates.

Net income of $3.34 million, or 1 cent a share, compared with a loss of $15.6 million, or 4 cents, a year earlier, the company, based in Waltham, Mass., said Wednesday in a statement. Sales fell 6.3 percent to $278.3 million in the period ended April 30.

Novell, which has about one-third of its work force in Provo, has cut jobs to reduce costs and is transforming itself into a seller of Linux software to counter market-share losses to Microsoft Corp.'s Windows and to Red Hat Inc., another Linux seller. Sales of its NetWare products declined 16 percent. In April, Novell bought E-Security Inc., adding identity-management and security software.

"The guidance was a little light," Randy Eckel, an M.S. Howells & Co. analyst, said in an interview after the earnings report. The analyst, based in Scottsdale, Ariz., rates the shares 'buy" and owns them.

Shares of Novell fell 68 cents, or 8.8 percent, to $7.05 in extended trading Wednesday. They rose 6 cents to $7.73 at 4 p.m. New York time in Nasdaq Stock Market composite trading and have dropped 12 percent this year.

This quarter, Novell forecasts profit, excluding some costs, of 3 cents a share on sales of $239 million to $247 million. Results exclude the Celerant subsidiary sold on May 25.

Analysts predict third-quarter profit of 4 cents, the average of 11 estimates, and sales of $282.9 million, according to a survey by Thomson Financial, which didn't disclose what was included in the estimates.

Novell had net income of $2.14 million, or breakeven on a per-share basis, and sales of $290.2 million a year earlier.

Excluding some costs, second-quarter profit of 3 cents met the average estimate of 11 analysts surveyed by Thomson Financial. They predicted sales to fall to $278.4 million from $297.1 million a year earlier.