Novell Reports Financial Results for First Fiscal Quarter 2006
* Consolidated Unaudited Condensed Statements of Operations
* Consolidated Unaudited Condensed Balance Sheets
* Consolidated Unaudited Condensed Statements of Cashflows Statement of Cash Flows
* Unaudited Non-GAAP Adjusted Earnings Information
Year-over-year results show continued improvement led by product revenue growth
WALTHAM, Mass.—02 Mar 2006—Novell, Inc. (NASDAQ:NOVL) today announced financial results for its first fiscal quarter ended Jan. 31, 2006. For the quarter, Novell reported revenue of $274 million, compared to revenue of $290 million for the first fiscal quarter 2005. Net income available to common stockholders in the first fiscal quarter 2006 was $2 million or $0.00 per diluted common share. This compared to net income available to common stockholders of $392 million, or $0.90 per diluted common share, for the first fiscal quarter 2005, which included a $448 million net gain related to the settlement with Microsoft in that quarter.
On a non-GAAP basis, adjusted net income available to common stockholders for the first fiscal quarter 2006 was $18 million, or $0.04 per diluted common share, excluding stock-based compensation expense, the benefit from restructuring reversals and adjustments for income taxes, debt interest expense and the allocation of earnings to preferred stockholders. This compares to non-GAAP adjusted net income available to common stockholders for the first fiscal quarter 2005 of $10 million, or $0.03 per diluted common share, excluding the gain from the legal settlement with Microsoft, restructuring expenses, a gain on a sale of property, long-term investment impairments, and adjustments for income taxes, debt interest expense and the allocation of earnings to preferred stockholders.
In the first fiscal quarter 2006, foreign currency exchange rates unfavorably impacted total revenue by approximately $7 million year-over-year. Foreign currency exchange rates favorably impacted net income by $1 million year-over-year.
During the first fiscal quarter 2006, Novell recognized total Open Platform Solutions revenue of $56 million, which was up from $14 million in the year ago period. Total Open Platform Solutions included $43 million from sales of Open Enterprise Server (OES) and $13 million of revenue from other Linux* Platform Products and Other Open Platform Products. The year ago period did not include revenue from OES as it was introduced in the second fiscal quarter of 2005.
During the first fiscal quarter 2006, Novell recognized $63 million of Systems, Security and Identity Management revenue, up 20% year-over-year.
Also in the first fiscal quarter 2006, revenue from OES and NetWare-related products declined 11% from the year ago period.
Please refer to the financial schedules that are a part of this press release for a description of new solution revenue categories.
“We are pleased with the continued improvement in the core business this quarter,” said Jack Messman, chairman and CEO of Novell. “Our growth businesses of Linux, Identity and Resource Management are performing well, and we believe we will continue to see growth throughout the fiscal year.”
Cash, cash equivalents and short-term investments were $1.7 billion at Jan. 31, 2006, consistent with last quarter. Days sales outstanding in accounts receivable was 59 days at the end of the firstfiscal quarter 2006, consistent with the year ago quarter. Deferred revenue was $367 million at the end of the first fiscal quarter 2006, up $24 million or 7% from the prior year. Cash flow from operations was $25 million for the first fiscal quarter 2006, up from $4 million in the first fiscal quarter 2005, excluding the Microsoft settlement payment.
Full details on Novell’s reported results, including a reconciliation of the non-GAAP adjusted results, are included in the financial schedules that are a part of this release.
With regard to the previously announced common stock repurchase plan, Novell has not repurchased any of its common stock to date because it has been continuously subject to self-imposed trading blackouts.
Novell management provided the following financial guidance:
* Net revenue for the second fiscal quarter 2006 is expected to be between $272 million and $282 million.
* On a non-GAAP basis, net income per diluted common share for the second fiscal quarter 2006 is expected to be between $0.02 and $0.03, e xcluding an estimated $0.02 per share expense from stock-based compensation.
A summary of Novell’s vision, mission and strategy can be accessed on the Novell® Web site at: http://www.novell.com/company/ir/qresults/.
Conference call notification and Web access detail
A live Webcast of a Novell conference call to discuss the quarter will be broadcast at 5:00 PM ET March 2, 2006, from Novell’s Investor Relations Web page: http://www.novell.com/company/ir/qresults/. The domestic conference call dial-in number is 866-335-5255, password “Novell”, and the international dial-in number is +1-706-679-2263, password “Novell”.
The call will be archived on the Web site approximately 15 minutes after its conclusion, and will be available for telephone playback through midnight ET, March 16. The domestic toll-free replay number is 800-642-1687, and the international replay number is +1-706-645-9291. Replay listeners must enter conference ID number 4945003.
A copy of this press release is posted on Novell’s Web site at: http://www.novell.com/company/ir/qresults/.
Legal notice regarding forward-looking statements
This press release includes statements that are not historical in nature and that may be characterized as “forward-looking statements,” including those related to future financial and operating results, benefits and synergies of the company’s brands and strategies, future opportunities and the growth of the market for Identity and Access Management and Open Platform Solutions. You should be aware that Novell’s actual results could differ materially from those contained in the forward-looking statements, which are based on current expectations of Novell management and are subject to a number of risks and uncertainties, including, but not limited to, Novell’s ability to integrate acquired operations and employees, Novell’s success in executing its Linux and identity and resource management strategies, Novell’s ability to take a competitive position in the Linux and identity and resource management industries, business conditions and the general economy, market opportunities, potential new business strategies, competitive factors, sales and marketing execution, shifts in technologies or market demand and the other factors described in Novell’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on Jan. 10, 2006. Novell disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.
Novell, Inc. (Nasdaq: NOVL) delivers Software for the Open Enterprise™. With more than 50,000 customers in 43 countries, Novell helps customers manage, simplify, secure and integrate their technology environments by leveraging best-of-breed, open standards-based software. With over 20 years of experience, more than 5,000 employees, 5,000 partners and support centers around the world, Novell helps customers gain control over their IT operating environment while reducing cost. More information about Novell can be found at http://www.novell.com.
Novell is a registered trademark, and Software for the Open Enterprise is a trademark of Novell, Inc. in the United States and other countries. * Linux is a registered trademark of Linus Torvalds. All other third-party trademarks are the property of their respective owners.
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