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Novell Earns Q4 Profit As Its Sale Draws Closer

Sales declined in the quarter, hit by uncertainty over the company's future.

software

Novell is in the process of being acquired by Attachmate, a Bellevue, Wash.-based software vendor, for $2.2 billion. The sale requires shareholder and regulatory approval and the companies expect to complete the acquisition sometime in the first three months of 2011.

For the fourth quarter ended Oct. 31, Novell reported sales of $206.5 million, down more than 4 percent from $215.6 million in the same quarter last year. But the company reported a net profit of $322.2 million compared to a net loss of $255.7 million one year ago. The bottom line included an income tax benefit of $296.6 million.

"I am pleased with our fourth-quarter performance," said Novell president and CEO Ron Hovsepian, in a statement. "We continue to see strong performance from our Linux business with invoicing for Linux, excluding Microsoft certificates, up over 40 percent from the year ago period and the prior fiscal year."

He went on to say the company "saw some stabilization" in the Novell collaboration solutions business and that Novell "continue[s] to invest in the business" while improving operating margins.

For the fourth quarter Novell's security, management and operating platforms generated revenue of $128.3 million, down more than 2 percent from $131.5 million in last year's fourth quarter. Collaboration applications brought in revenue of $78.2 million, down 7 percent from $84.2 million one year earlier.

Novell has been exploring a possible sale since March when it rejected a buy-out offer from investment firm Elliott Associates valued at approximately $2 billion. Earlier this year Hovsepian said Novell's sales have been hurt by the uncertainty over the company's future.

For all of fiscal 2010 ended Oct. 31, Novell reported sales of $811.9 million, down almost 6 percent from $862.2 million in fiscal 2009. But for the year the company turned a profit of $377.9 million compared to a loss of $212.7 million in fiscal 2009.

Attachmate is a developer of software for terminal emulation, legacy software modernization, systems and security management, and application integration. The company plans to operate Novell as two business units, Novell and SUSE, and join them with its other business holdings. SUSE is Novell's version of the Linux operating system.

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