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Novell Swings to Profit

The company beats Wall Street's profit estimates.

Updated from 4:32 p.m. EST




swung to a second-quarter profit Thurday, beating analysts' estimates.

Revenue at the Waltham, Mass., software company grew 1.4% to $235.7 million from $232.4 million in the same quarter of last year. Analysts polled by Thomson Reuters were expecting a top line of $233.3 million.

The bottom line moved to a profit of $5.9 million, or 2 cents a share, from a loss of $2.9 million, or a penny a share, in the year-ago period.

Excluding special items, EPS was 6 cents, a penny better than analysts' expectations.

Shares were up 9 cents, or 1.3%, to $6.80 in extended trading.

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While revenue from licenses, maintenance and subscriptions rose, services revenue fell 19% to $41.1 million.

Gross margin was 74%, vs. 72% one year ago. Total deferred revenue at the end of the quarter was flat year over year, at $702 million.

Exchange rates added $8 million to revenue and $9 million to expenses, hurting income from operations by $1 million year over year, the company reported.

The company provides open-source software, competing against

Red Hat

(RHT) - Get Red Hat, Inc. Report

, which is expected to report in June on its fiscal first quarter. Novell both partners with and competes against


(MSFT) - Get Microsoft Corporation Report