Restructuring dings Novell’s earnings

Software company Novell on Thursday swung to a quarterly net loss from a year-ago profit due mainly to $38 million in restructuring charges.

The company’s fourth-quarter net loss was $5 million, or 1 cent per share, compared with a net profit of $15 million, or 3 cents per share, a year ago.

Excluding items such as restructuring charges of $38 million, the company said it posted a quarterly profit of 7 cents per share. On that basis, analysts on average were expecting the company to post a per-share profit of 3 cents.

The results come after Novell said in early November it would restructure its business in a move that would reduce annual expenses by more than $110 million. The company is seeking to replace its shrinking networking software business by building update and support services for Linux software.

Novell, along with Red Hat, offers versions of Linux aimed at businesses. Linux, which runs on the same personal computers that run Microsoft’s Windows software can be obtained for free and modified. The company plans to concentrate on opportunities in the Linux and open source and identity and resource management markets.

Fourth-quarter revenue rose to $320 million from $301 million as demand for both software licenses and maintenance and services increased from a year earlier.

Total operating expenses rose to $224 million from $175 million as the company continued its push to restructure its field operations and focus its business on the Linux and Identity management markets.

The company also issued its first financial forecast in about two years. It sees first-quarter 2006 revenue ranging from $260 million to $270 million with earnings per share at 2 cents to 3 cents. This excludes an estimated 3 cents per share cost from the expensing of stock options.

It also said the previously-announced restructuring would hit revenue by about $40 million to $50 million in fiscal 2006, excluding expected declines in its legacy work-group business.

The company also said it was targeting operating margins between 12 percent and 15 percent for fiscal 2008.

Novell shares fell 11 cents, or 1.4 percent, to close at $7.67 on Nasdaq.

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