Novell has begun an internal review to investigate how the company granted stock options to employees in recent years and to assess whether, in light of the findings, Novell will need to restate any earnings.The software vendor made the announcement Tuesday afternoon as it released third-quarter results for fiscal 2006. Novell cautioned that the results should be considered preliminary financials until it has concluded its voluntary stock options review. The company didn\u2019t provide a date as to when it expects those investigations to be complete, and so it\u2019s possible Novell may need to delay the filing of its third-quarter Form 10-Q to the U.S. Securities\u00a0and Exchange Commission (SEC).On a conference call with analysts, Ronald Hovsepian, president and chief executive officer of Novell, said the review was "in no way a reflection on the quality of our business or the future growth prospects." Novell will report on the progress of the investigation as appropriate. "In the meantime, it\u2019s full speed ahead with building our business and executing on our strategy," he added.Novell\u2019s move comes as the SEC continues to widen its probe into potentially fraudulent stock options practices occurring now or in the past at U.S. companies and related to the backdating of options. By timing the granting of options to a low point in a company\u2019s stock, an options recipient could buy shares cheaply and then resell them for a greater profit once the vendor\u2019s share price rose.Already the SEC investigation has touched a number of IT companies including Sycamore Networks, and the SEC has filed securities fraud charges against the former management heads of software vendor Comverse Technology and storage networking firm Brocade Communications Systems.Other IT vendors including Apple Computer, CA, McAfee and Rambus have identified irregularities in their options accounting that, in some cases, led to the companies restating financial results dating back several years.Novell\u2019s preliminary third-quarter results saw the company reporting net income of US$11.6 million on revenue of US$241.3 million and earnings per share (EPS) of $0.03.For the fourth financial quarter due to end Oct. 31, Dana Russell, Novell\u2019s interim chief financial officer, estimated the company\u2019s revenue will be between $246 million and $256 million with an EPS of $0.04. Those predictions don\u2019t take account of the findings of the stock options review, he noted, with the likely impact of that investigation knocking EPS down to $0.01.Russell said Novell\u2019s leadership isn\u2019t happy with the company\u2019s current overall level of profitability, but believes it\u2019s on "the right track for the health of the business," expecting long-term profitability to improve.-China Martens, IDG News Service (Boston Bureau)Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.