Novell Reports 83% Decline in Earnings, but Still Beats Estimates

Novell(NOVL Quote) on Wednesday reported that its quarterly earnings were down nearly 83% on weaker overall sales, but the results still remained above Wall Street estimates.

The Provo, Utah-based software maker posted fiscal third-quarter earnings of $8.57 million, or 3 cents a diluted shares. That's down from its net income of $49.31 million, or 14 cents a share, reported in the comparable quarter of 1999. Revenue fell 17%, to $270 million, in the fiscal quarter, ending July 31, from $327 million a year earlier.

Though the company's quarterly earnings beat the consensus estimate among analysts surveyed by First Call/Thomson Financial by a penny per share, investors paid more attention to the year-over-year drop in revenue and earnings.

In after-hours trading, shares of Novell were down 11/16, or about 6.5%, to 10. Shares had climbed 1/16 finishing at 10 15/16 during the regular session ahead of the earnings release.

"Although we met our total revenue and earnings objectives for the third quarter, we are nonetheless disappointed by continued weakness of packaged software sales globally, and especially our poor performance in Europe,'' Eric Schmidt, Novell's chairman and chief executive, said in a statement.

Schmidt said "difficult changes" also had an impact on the company's performance in the quarter. In an attempt to streamline operations and improve sales, the company recently restructured itself into three business units and reorganized its sales structure and strategies. Schmidt assured that Novell would take additional action to ensure its expenses are in line with revenue in the fourth quarter, but he did not elaborate.

The company, which provides software that delivers services to Internet, intranet, and extranet networks, also announced plans to buy back as much as $500 million of its stock.