Updated from 6:17 p.m. EST

Novell

(NOVL)

, the networking-software maker that acquired SUSE Linux last year, swung to a fiscal first-quarter profit Monday from a loss a year ago, although revenue fell short of expectations.

Under generally accepted accounting principles, Novell, which is banking on its Linux acquisitions to jump-start growth, reported net income of $10.1 million, or 3 cents a share, in the first quarter, which ended Jan. 31. That reversed a net loss of $11.9 million, or 3 cents a share, in the same period a year earlier. The results in the just-completed quarter include two weeks of business from SUSE Linux, totaling $2 million.

Excluding charges, Novell said it earned pro forma net income of $11.3 million, or 3 cents a share, in the first quarter, which was in line with the consensus estimate. A year ago, Novell posted a pro forma loss of $909,000, or break-even on a per share basis, a year earlier.

Revenue totaled $267.1 million, up 2.7% from a year ago but less than the consensus estimate of $270.2 million. The effect of currency exchange rates contributed $12 million in revenue.

Since announcing its acquisition of SUSE Linux in November, Novell shares have climbed 45.6%, far better than the

Nasdaq Composite's

4.1% rise. The $210 million acquisition of Germany-based SUSE, the second-largest Linux vendor behind

Red Hat

(RHAT)

, followed Novell's acquisition in August of Ximian, which makes Linux software for the desktop.

Novell is hoping that its move into the Linux open source market will bring a much-needed boost in sales. Before the acquisitions, Novell had been wrestling with stagnating growth in its Netware network operating system business.

In a postclose conference call, Novell CEO Jack Messman said the company is already seeing the results of its new emphasis on Linux. He cited one Latin American customer migrating to Linux that renewed its Netware contract with the company -- a move it wouldn't have made without the company's Linux commitment. That government customer is planning to migrate from

Microsoft

(MSFT) - Get Report

Windows to Linux and from Microsoft Office to an open-source alternative on more than 10,000 workstations, Messman said, without revealing the customer's identity.

"The foundation for Novell's growth is being built as we speak," Messman said. "We think 2004 is going to be the year for SUSE at the enterprise level." He forecast that the company's North American business, in the midst of a restructuring after faltering, should show improvement in the third quarter.

The company, in keeping with its past policy, did not offer guidance. Philip Rueppel, an analyst with Americas Growth Capital, said he expects the results from the company's new emphasis on Linux to begin showing up early next year. He called last quarter's results positive, noting that a decline in Netware business slowed and Linux is showing some early momentum.

"Any company that is this big and going through this much of a transformation is not going to be firing on all cylinders," said Rueppel, who estimates the intrinsic value of Novell stock is currently $10.05. He does not have a rating on the company. His firm hasn't done banking with Novell.

Novell shares recently rose 37 cents, or 3.3%, to $11.58 in after-hours trading Monday after closing the regular session up 54 cents, or 5.1%, at $11.21.