Novell: No comment on Layoff Rumors

Troubled software vendor Novell Inc. wouldn’t comment on a growing number of reports and rumors circulating Monday that the company is about to lay off as much as 20 percent of its workforce as a way of cutting costs.

“Novell won’t comment on rumor or speculation,” Bruce Lowry, Novell’s director of global public relations, said in an e-mail response to questions.

In its most recent financial report, released Aug. 25, Novell reported poor third-quarter results, with net income plummeting 91 percent to US$2.1 million, while revenue fell 4.7 percent to $290.2 million. At that time, Jack Messman, Novell’s chairman and chief executive officer, did hint that further changes to the company’s structure lay ahead. “While we were profitable this quarter, we still have improvements to make in our business which will lead to cost reductions,” he said in a statement.

Novell remains fairly cash rich with $1.6 billion on hand, according to the company’s third-quarter results.

The company has come under increasing pressure from one of its shareholders, Blum Capital Partners LP, as made public in Novell’s 8-K report filed with the U.S. Securities and Exchange Commission Oct. 4. Blum has been pushing Novell to cut costs, spin off some of its businesses and place more emphasis on its Linux software.

In one of his responses to Blum’s correspondence cited in the SEC filing, Messman restated Novell’s position on its Celerant consulting operation. “To reiterate, we envision Celerant being separated from Novell in some fashion when market and other conditions are appropriate,” he wrote in a letter dated Oct. 4. In the same letter, he said that Novell didn’t intend to spin off either its GroupWise collaboration software or its ZenWorks resource management software.

By China Martens – IDG News Service (Boston Bureau)