Novell's 1st-quarter loss is $19.9 million

Novell Inc., which sells networking software and computer-consulting services, reported a first-quarter loss after sales declined more than analysts expected.

The loss was $19.9 million, or 6 cents a share, compared with profit of $1.87 million, or break-even, a year earlier, Novell, based in Waltham, Mass., said in a statement Thursday. Five analysts polled by Bloomberg had expected a profit of 1 cent.

Sales fell 5.2 percent to $229.6 million in the period ended Jan. 31, compared with the $235 million average estimate of analysts.

Novell, which has about one-third of its work force in Provo, is spending as much as $45 million in a restructuring plan to try to increase profit after its sixth straight quarter of declining revenue. The company's bid to transform itself into a seller of Linux operating-system software hasn't produced enough revenue to offset declines from older products.

Many of Novell's contracts last years, so revenue is not recognized all at once, said CFO Dana Russell. The company had $91 million in Linux software bookings, a measure of future revenue, in the quarter, he said in an interview. That compares with $60 million for all of last year.

Shares of Novell, which have dropped 31 percent in the past year, fell 19 cents to $6.52 in trading after the report was released. They rose 9 cents to $6.71 at 4 p.m. (EST) in NASDAQ Stock Market trading.

Novell said sales for the year will be $945 million to $975 million, compared with the $962.8 million average estimate of 14 analysts surveyed by Bloomberg.

For the second quarter in a row, Russell declined to say how many workers will be fired as part of Novell's cost-cutting program, which seeks to move research labs to countries with cheaper labor and sell more products over the phone and Internet. A small number of employees have already been dismissed, Russell said. The company will make the remaining cuts over the next three quarters, he said.

The results are preliminary, because Novell is reviewing its accounting for stock-option grants.