Novell Reports Strong 2Q Revenue, Income

Novell continues its return to steadier financial ground, reporting yesterday that revenue and net income rose in its fiscal second quarter.

The company reported revenue of $316 million, a 20% increase over its second-quarter 1998 revenue of $262 million. Net income more than doubled: Novell earned nearly $39 million during the quarter ended April 30, up from $19 million in the second quarter last year. Year to date, net income, which Novell reported at almost $68 million, is also nearly double last year's figure.

Analysts credit Novell with delivering network operating system and directory software at a time when the next releases of Microsoft's Windows 2000 operating system and Active Directory software remain mired in delay. "Microsoft gave them an opening here with the delay in Windows 2000, and Novell has taken good advantage of it," says Chuck Phillips, a software industry analyst at Morgan Stanley Dean Witter & Co. in New York. "They recognize that customers need to make [product] decisions now."

Phillips predicts Novell will remain on solid financial footing until at least early next year, when Microsoft releases its new operating system as well as Active Directory, which will compete head to head with Novell Directory Services.

Novell's stock closed yesterday at 23 3/4, down 1/4, prior to the earnings announcement.