Novell Delays Q4 Earnings Release In Face Of SEC Review

Novell has postponed releasing its fourth quarter and year-end financial results, originally scheduled for Wednesday, while the Securities and Exchange Commission reviews several earlier earnings reports from the company, Novell announced.

Novell did not disclose the reasons for the SEC review. While the Waltham, Mass.-based company could not say when it might report its results for the quarter and fiscal year ended Oct. 31, it currently expects to file its Form 10-K for fiscal 2007 on or before its Dec. 31 due date.

Novell said it received a "comment letter" from the SEC dated Aug. 7, 2007 concerning the Form 10-K and Form 10-Q the company filed for its fiscal year and fourth quarter, respectively, that ended Oct. 31, 2006, Novell said in a statement.

In that 10-K, Novell reported earnings of $18.7 million on sales of $967.3 million for fiscal 2006. Before filing the final 10-K, Novell issued financial results for the fourth quarter and fiscal year in early December 2006 that it said were preliminary because the company was reviewing its "historical stock-based compensation practices and related potential accounting impact," the company said in a statement at the time. While the company's revenue number did not change between the preliminary report and the 10-K, the company's reported net profit for fiscal 2006 dropped from $31.6 million in the preliminary earnings announcement to $18.7 million in the 10-K. It was unclear whether the SEC review is in any way related to those actions.

Novell responded to the SEC query in a letter on Sept. 20 and the SEC replied on Oct. 18 with a second comment letter "limited to certain accounting matters," Novell said in its statement. Novell replied to that second letter on Nov. 7, but hasn't received a response.

"We are confident of our accounting and are working diligently with the SEC to respond to their inquiries," Novell CFO Dana Russell said in Wednesday's statement. "In an abundance of caution, we have chosen to postpone our earnings release."

A Novell spokesman would not elaborate beyond the company's statement on the SEC review.

For the first three quarters of fiscal 2007 ended July 31 Novell, a supplier of Linux and infrastructure software, reported a loss of $25.6 million on sales of $706.9 million. Last month Novell embarked on a major overhaul of its channel program -- including its channel leadership -- that's designed to move more of its sales through resellers rather than its direct sales force.