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Novell decimates workforce

Novell is slashing 10% of its workforce to save $110m (£65m) on annual operating expenses.

The job cuts were widely expected, although some industry estimates predicted a 20% headcount cut. The confirmed cuts represent 600 jobs, although this number could rise depending on the results of an external study of the company's Celerant consulting division.

Novell said the cuts would leave product development and consulting resources more focused on the company's growth businesses of Linux and identity management.

Novell is striving to move beyond its reliance on its ageing Netware operating system for its main revenue stream. The amount of new business from the company's Netware network management system is declining as users increasingly turn to Windows, Linux and other operating systems to support their servers and networks.

Novell anticipates making a restructuring charge in the range of $30m-$35m in its forthcoming quarterly results to help pay for the cuts, with the full financial effects of the changes expected to hit in the first quarter ending 31 January.

Jack Messman, Novell chief executive officer, said, “This cost restructuring initiative is part of the comprehensive transformation of Novell’s business that the management team has been designing and implementing over the past year.

“This is a decisive yet disciplined cost-reduction action that balances the need to be fiscally prudent with the need to continually seek growth opportunities and generate long-term profitability."


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