Novell Inc., the second-biggest seller of Linux operating-system software in the United States, has reported a fiscal fourth-quarter loss of $17.9 million as severance costs rose. Sales for the current year will fall short.
The loss was 5 cents a share, compared with a profit of $19.9 million, or 5 cents a share, a year earlier, Novell, based in Waltham, Mass., said Thursday in a statement. Sales rose 4.8 percent to $244.9 million.
Novell is in the middle of a cost-cutting plan that aims to boost operating margins by moving jobs to less expensive countries such as India and selling more products over the phone and Internet. The company has 1,200 employees at its facility in Provo after laying off 200 employees there in October whose jobs were going to India.
The expense-reduction program cost $47 million through Oct. 31, the company said. The reorganization will result in costs of as much as $25 million in the current year, mostly for severance payments.
Novell, which trails Red Hat Inc. in the market for Linux software, said revenue for fiscal year 2008 will be $920 million to $945 million.
"Services revenue will go down a bit," Novell's chief financial officer Dana Russell said in an interview. "But these changes will allow us to move into a more profitable state."
Novell dropped 60 cents to $6.50 in extended trading. The shares, which have risen 15 percent this year, lost 1 cent to $7.10 at 4 p.m. New York time in Nasdaq Stock Market trading.
Before Thursday, the company posted sales declines in seven of the past 10 quarters because Linux software revenue didn't grow quickly enough to make up for declines in older products. Linux product revenue rose 69 percent to $22 million in the quarter.
Novell had delayed its earnings report last week because of a U.S. Securities and Exchange Commission review of its annual and quarterly reports. The company said Wednesday that the investigation has been completed and no restatements are needed.
Linux is a freely distributed operating system that competes with Microsoft Corp.'s Windows. Companies such as Novell and Red Hat sell business versions of Linux, as well as customer support.