Novell Beats Estimates

The weak sales spot for the quarter was in Novell's identity and security management business, whose invoicing was up a scant 3% year over year due to poor sales execution, said President and CEO Ron Hovsepian.

A bright spot was in the Workgroup business unit, which had been hemorrhaging sales. Revenue declined a mere 2%, to $83 million, and invoicing declined 9%, also one of the lowest rates in recent memory. "It's too early to conclude that this is a trend," Hovsepian said.

The company ended the quarter with year-to-date operating income, excluding items, of $19 million, and is on track to end the year with an operating margin of 5% to 7%, said CFO Dana Russell.

The company brought sales and marketing expense down by 5.7% year on year to $84.6 million. Although some marketing campaigns are seasonal and expenses will rise, Novell is beginning to transition to a more cost-efficient Teleweb program to promote contract renewals, Hovsepian said.

Broader economic turmoil has not shown up yet in sales to corporations or, more specifically, the financial services market, Hovsepian said. "That doesn't mean there won't be some elongation of sales cycles, but ... I'm not seeing the macro impact now."