His reason for the speculation is a conversation with Novell CFO Dana Russell, who discussed the possibility of a break-up or sale. Up until now, Novell has been trying to talk a strong game -- though, to be fair, I've yet to see the tech company that didn't. About ten days ago, both Novell and Microsoft were touting the number of joint customers they had signed:
In a statement, the software makers say they have signed more than 100 joint customers in the past six months. That's twice the rate at which they had been signing folks as part of an 2006 accord, the two companies said. In total, the two companies say they have sold $200 million worth of Novell support and maintenance certificates to more than 300 customers.Look at the company's 2008 10-K (fiscal year ending October 31, 2008) and you see that net revenue was about $957 million. Although we don't have details on the partnership with Microsoft, it would suggest that the venture could represent a significant portion of its revenue. Now compare that with the statement of operations, including historic numbers back to 2004:
Novell is in a position that 2005 represents the recent high water mark for its financial success. Revenue is down, though at least heading back up after the steep drop in 2006. More troublesome is that as income began to increase, the company slid into annual losses, with shareholder equity down significantly as well. It's the sort of picture that would make management consider something to placate investors.
The current fiscal year also offers no relief. Net revenue for November 1 through April 30 is down 7.7 percent, although expenses seem to be coming under some control and net income was actually up, from about $22.7 million to $26.3 million. But, as the saying goes, it's tough to cut your way into greatness, and it's the top line revenue doldrums that will be hard to shake. In a youthful world that supposedly is interested in open technology, Novell seems to be showing its age.
I talked briefly with a Novell spokesman and am waiting for more information or a comment. But entering pure speculation for a moment, given the relative importance of the Microsoft deal, could a Microsoft purchase of Novell be possible?
[UPDATE: Novell has filed an 8K with the SEC stating that the company has "no current plans to sell the company." Of course, that doesn't mean that management is not considering a sale and it also leaves open the room for selling anything shy of the entire company. It also is not a statement that management has no interest in selling all or part of the company in the interest of shareholders. I asked a company spokesman about this, who said that they stand by the statement. So, we're pretty much left with the word from DiFucci.]