Novell Financials: SUSE Linux Rises, Security Falls
Novell spent most of the 1990s as a one-hit wonder, searching for growth opportunities beyond NetWare. Fast forward to the present, and Novell is experiencing deja vu. This time, Novell’s one-hit wonder is SUSE Linux. Skeptical? Check out Novell’s latest quarterly results.
First, the good news: Novell’s quarterly net income actually beat Wall Street’s expectations by a penny per share. But net income was down 36 percent and revenue was down 7 percent compared to the corresponding quarter last year, according to the Associated Press. In stark contrast, Red Hat’s revenue and net income both rose significantly during that company’s most recent quarter.
Admittedly, a head-to-head comparison of Novell and Red Hat financials isn’t really fair. Red Hat doesn’t have Novell’s legacy baggage. Plus, Red Hat also has two popular open source product lines (Red Hat Linux and JBoss middleware) compared to Novell’s singular hit: SUSE Linux.
What Happened to Identity and Security?
Sure, Novell bet a portion of its business on security and identity management. But The VAR Guy has always been a bit confused by the move. He wishes Novell would focus instead on building its own SUSE Linux application stack.
People buy applications, not operating systems. Didn’t Novell get the memo?
In recent quarters Novell’s security and identity management had been growing. But not this time around. Check out the stats:
- Novell reported $37 million of product revenue from Open Platform Solutions, of which $35 million was from Linux Platform Products, up 24% compared to the same period last year. (Translation: Nice growth, SUSE team.)
- Product revenue from Identity and Security Management was $28 million, of which Identity, Access and Compliance Management (formerly called Identity and Access Management) was $26 million, down 8% compared to the same period last year. (Translation: Um, this sounds pretty bad.)
- Product revenue from Systems and Resource Management was $40 million, up 9% compared to the same period last year. (Translation: Not bad.)
- Workgroup product revenue of $81 million decreased 9% compared to the same period last year. (Translation: No surprise here, since this is a declining business for Novell.)
Novell needs to whip its security and identity management business into shape. Quick: Can any VARs actually name products from that Novell business unit?