Yeah, well. Wrong. Novell managed to turn the corner and wean themselves off of the NetWare cash-cow. Take the last quarterly statement, which you can read in full glory here. I'm going to excerpt some bits, but it'll get long. First off, their description of their market segments. I'll try to include relevant products where I know them.
The reduction in 'services' revenue is, I believe, a reflection in a decreased willingness for companies to pay Novell for consulting services. Also, Novell has changed how they advertise their consulting services which seems to also have had an impact. That's the economy for you. The raw numbers:We are organized into four business unit segments, which are Open Platform Solutions, Identity and Security Management, Systems and Resource Management, and Workgroup. Below is a brief update on the revenue results for the second quarter and first six months of fiscal 2009 for each of our business unit segments:
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Within our Open Platform Solutions business unit segment, Linux and open source products remain an important growth business. We are using our Open Platform Solutions business segment as a platform for acquiring new customers to which we can sell our other complementary cross-platform identity and management products and services. Revenue from our Linux Platform Products category within our Open Platform Solutions business unit segment increased 25% in the second quarter of fiscal 2009 compared to the prior year period. This product revenue increase was partially offset by lower services revenue of 11%, such that total revenue from our Open Platform Solutions business unit segment increased 18% in the second quarter of fiscal 2009 compared to the prior year period.
Revenue from our Linux Platform Products category within our Open Platform Solutions business unit segment increased 24% in the first six months of fiscal 2009 compared to the prior year period. This product revenue increase was partially offset by lower services revenue of 17%, such that total revenue from our Open Platform Solutions business unit segment increased 15% in the first six months of fiscal 2009 compared to the prior year period.
[sysadmin1138: Products include: SLES/SLED]
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Our Identity and Security Management business unit segment offers products that we believe deliver a complete, integrated solution in the areas of security, compliance, and governance issues. Within this segment, revenue from our Identity, Access and Compliance Management products increased 2% in the second quarter of fiscal 2009 compared to the prior year period. In addition, services revenue was lower by 45%, such that total revenue from our Identity and Security Management business unit segment decreased 16% in the second quarter of fiscal 2009 compared to the prior year period.
Revenue from our Identity, Access and Compliance Management products decreased 3% in the first six months of fiscal 2009 compared to the prior year period. In addition, services revenue was lower by 40%, such that total revenue from our Identity and Security Management business unit segment decreased 18% in the first six months of fiscal 2009 compared to the prior year period.
[sysadmin1138: Products include: IDM, Sentinal, ZenNAC, ZenEndPointSecurity]
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Our Systems and Resource Management business unit segment strategy is to provide a complete “desktop to data center†offering, with virtualization for both Linux and mixed-source environments. Systems and Resource Management product revenue decreased 2% in the second quarter of fiscal 2009 compared to the prior year period. In addition, services revenue was lower by 10%, such that total revenue from our Systems and Resource Management business unit segment decreased 3% in the second quarter of fiscal 2009 compared to the prior year period. In the second quarter of fiscal 2009, total business unit segment revenue was higher by 8%, compared to the prior year period, as a result of our acquisitions of Managed Object Solutions, Inc. (“Managed Objectsâ€) which we acquired on November 13, 2008 and PlateSpin Ltd. (“PlateSpinâ€) which we acquired on March 26, 2008.
Systems and Resource Management product revenue increased 3% in the first six months of fiscal 2009 compared to the prior year period. The total product revenue increase was partially offset by lower services revenue of 14% in the first six months of fiscal 2009 compared to the prior year period. Total revenue from our Systems and Resource Management business unit segment increased 1% in the first six months of fiscal 2009 compared to the prior year period. In the first six months of fiscal 2009 total business unit segment revenue was higher by 12% compared to the prior year period as a result of our Managed Objects and PlateSpin acquisitions.
[sysadmin1138: Products include: The rest of the ZEN suite, PlateSpin]
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Our Workgroup business unit segment is an important source of cash flow and provides us with the potential opportunity to sell additional products and services. Our revenue from Workgroup products decreased 14% in the second quarter of fiscal 2009 compared to the prior year period. In addition, services revenue was lower by 39%, such that total revenue from our Workgroup business unit segment decreased 17% in the second quarter of fiscal 2009 compared to the prior year period.
Our revenue from Workgroup products decreased 12% in the first six months of fiscal 2009 compared to the prior year period. In addition, services revenue was lower by 39%, such that total revenue from our Workgroup business unit segment decreased 15% in the first six months of fiscal 2009 compared to the prior year period.
[sysadmin1138: Products include: Open Enterprise Server, GroupWise, Novell Teaming+Conferencing,
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(In thousands) | | Net revenue | | Gross profit | | | Operating income (loss) | | | Net revenue | | Gross profit | | | Operating income (loss) | | ||||||
Open Platform Solutions | | $ | 44,112 | | $ | 34,756 | | | $ | 21,451 | | | $ | 37,516 | | $ | 26,702 | | | $ | 12,191 | |
Identity and Security Management | | | 38,846 | | | 27,559 | | | | 18,306 | | | | 46,299 | | | 24,226 | | | | 12,920 | |
Systems and Resource Management | | | 45,354 | | | 37,522 | | | | 26,562 | | | | 46,769 | | | 39,356 | | | | 30,503 | |
Workgroup | | | 87,283 | | | 73,882 | | | | 65,137 | | | | 105,082 | | | 87,101 | | | | 77,849 | |
Common unallocated operating costs | | | — | | | (3,406 | ) | | | (113,832 | ) | | | — | | | (2,186 | ) | | | (131,796 | ) |
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Total per statements of operations | | $ | 215,595 | | $ | 170,313 | | | $ | 17,624 | | | $ | 235,666 | | $ | 175,199 | | | $ | 1,667 | |
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(In thousands) | | Net revenue | | Gross profit | | | Operating income (loss) | | | Net revenue | | Gross profit | | | Operating income (loss) | | ||||||
Open Platform Solutions | | $ | 85,574 | | $ | 68,525 | | | $ | 40,921 | | | $ | 74,315 | | $ | 52,491 | | | $ | 24,059 | |
Identity and Security Management | | | 76,832 | | | 52,951 | | | | 35,362 | | | | 93,329 | | | 52,081 | | | | 29,316 | |
Systems and Resource Management | | | 90,757 | | | 74,789 | | | | 52,490 | | | | 90,108 | | | 74,847 | | | | 58,176 | |
Workgroup | | | 177,303 | | | 149,093 | | | | 131,435 | | | | 208,840 | | | 173,440 | | | | 155,655 | |
Common unallocated operating costs | | | — | | | (7,071 | ) | | | (228,940 | ) | | | — | | | (4,675 | ) | | | (257,058 | ) |
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Total per statements of operations | | $ | 430,466 | | $ | 338,287 | | | $ | 31,268 | | | $ | 466,592 | | $ | 348,184 | | | $ | 10,148 | |
So, yes. Novell is making money, even in this economy. Not lots, but at least they're in the black. Their biggest growth area is Linux, which is making up for deficits in other areas of the company. Especially the sinking 'Workgroup' area. Once upon a time, "Workgroup," constituted over 90% of Novell revenue.
Revenue from our Workgroup segment decreased in the first six months of fiscal 2009 compared to the prior year period primarily from lower combined OES and NetWare-related revenue of $13.7 million, lower services revenue of $10.5 million and lower Collaboration product revenue of $6.3 million. Invoicing for the combined OES and NetWare-related products decreased 25% in the first six months of fiscal 2009 compared to the prior year period. Product invoicing for the Workgroup segment decreased 21% in the first six months of fiscal 2009 compared to the prior year period.Which is to say, companies dropping OES/NetWare constituted the large majority of the losses in the Workgroup segment. Yet that loss was almost wholly made up by gains in other areas. So yes, Novell has turned the corner.
Another thing to note in the section about Linux:
The invoicing decrease in the first six months of 2009 reflects the results of the first quarter of fiscal 2009 when we did not sign any large deals, many of which have historically been fulfilled by SUSE Linux Enterprise Server (“SLESâ€) certificates delivered through Microsoft.Which is pretty clear evidence that Microsoft is driving a lot of Novell's Operating System sales these days. That's quite a reversal, and a sign that Microsoft is officially more comfortable with this Linux thing.