New Look, Familiar Faces at Novell

Novell this week announced that Stone has been appointed to the newly created position of vice chairman, office of the CEO. Stone, who served as executive vice president for strategy and development at Novell from 1997 to 1999, will be responsible for overseeing the company's engineering, marketing, product management, alliances and consulting functions. Starting Monday, Stone will report to Messman.

Stone reportedly left Novell to start Tilion, a software company based in Maynard, Mass., that specializes in real-time enterprise management software. He earned distinction when he helped create the Object Management Group, where he developed the CORBA software language. Stone resigned as CEO of Tilion this week but will remain chairman. Novell announced that it intends to make Tilion a partner.

Stone figures to cover the loss of Stuart Nelson, Novell's COO and an eight-year veteran of the software maker. Nelson, who formerly managed the GroupWise business and product line and also served as senior vice president of research and development, will exit the company within the next several weeks, according to Novell. Neither Nelson nor Novell has disclosed the reason for Nelson's departure.

Since the acquisition of solution provider Cambridge Technology Partners last summer, Novell has been eager to reinvent itself, and the changes have started at the top. Messman, formerly president and CEO at Cambridge, replaced Eric Schmidt as CEO of Novell in July. Other board and executive positions changed hands in the wake of the acquisition. Soon, Novell was focusing more on developing solutions, with Cambridge helping to pave the way, rather than simply selling software. Messman is now concentrating on improving channel relations and developing a stronger partner program while reshaping the corporate culture at Novell.

After a tumultuous end to 2001, which saw a loss of $272.9 million for the year and massive layoffs, Novell has seen signs of improvement. Along with well-received enhancements to its channel program, PartnerNet, Novell delivered surprising financial results Thursday for its first quarter for fiscal 2002. Novell reported $271 million in revenue and earnings of 2 cents a share, thanks to major cost-cutting efforts and software sales. The company expected to break even this quarter while many Wall Street analysts predicted a loss of 1 cent a share before charges.

While Novell beat expectations, software sales were down slightly from the fourth quarter of 2001. Ironically, consulting services, which constitutes more than a quarter of Novell's revenue, experienced a higher than expected drop of 26 percent from the previous quarter. Messman, however, says the integration of Cambridge was near completion and that the solution provider will be a powerful asset to Novell. The company says it expects revenue for the second fiscal quarter ending April 30, 2002, to be between $255 and $265 million.

"Cost-cutting actions we took last fall enabled us to lower costs from the prior period by $40 million," Messman said in a statement Thursday. "We've begun to achieve our near-term objective of improved profitability as we address the longer-term issue of returning Novell to sustainable growth overall."