Novell predicts further IT sector gloom

Novell has predicted that the IT market will show no short-term signs of recovery as it overcame disappointing sales figures to...

Novell has predicted that the IT market will show no short-term signs of recovery as it overcame disappointing sales figures to report better-than-expected third-quarter earnings.

Returning a four cents-per-share dividend, the company reported net earnings of $13m, excluding non-recurring items, for the quarter to 31 July.

Jack Messman, the president and chief executive officer of Novell, said that while e-business solutions promised a high return on investment, it was apparent that it would take until the second half of 2002 before improving conditions would open up the market.

Novell reported a net-income loss of $19m for the quarter, compared to a net profit of $8.5m for the corresponding period last year. The company blamed the absorption of an extraordinary one-time restructuring cost of $39m during the quarter for the loss.

Net sales suffered from an 8% reduction to $247m, in spite of an $80m revenue fillip resulting from the company's acquisition of the IT consulting company Cambridge Technology in March.

Sales from Novell's large network site-licence business - which accounted for 68% of its total revenue - were $167m in the third quarter, a reduction of 3% compared to the previous quarter. Sales of the company's packaged software licences for smaller networks fell 9% to $33m.

A spokesman for Novell said the company expected to break even in the fourth quarter, with forecasted revenue of between $30m and $315m, although it warned that these figures could be revised as a result of further restructuring and integration costs.

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