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March 1, 2007

Microsoft deal works out for Novell

Posted by David Hunter at 9:16 PM ET.

Novell’s much discussed deal with Microsoft last November not surprisingly turns out to have had a lot of significance for Novell’s financial results last quarter:

Novell Inc. said Thursday that profit turned to loss during its fiscal first quarter and revenue fell 5%, while the company’s high profile partnership with Microsoft Corp. proved one of the only bright spots.

Waltham, Mass.-based Novell said after the market’s close that for the quarter ended Jan. 31 it had a loss of $19.9 million, or 6 cents a share, compared to net income of $1.87 million, or break-even, during the period a year ago.

Revenue for the quarter fell to $230 million, compared to $242 million a year ago. Wall Street analysts surveyed by Thomson Financial had expected the company to earn a cent a share on revenue of $234 million.

Quarterly revenue from Novell’s Linux platform unit, which operates the Microsoft partnership, grew 46% to $15 million, the company said.

Novell Chief Executive Ron Hovsepian said the Microsoft partnership generated $348 million in cash during the quarter, adding that “without the Microsoft impact cash flow from operations would have been zero.”

The question, of course, is whether Novell will be able to successfully get off the dole.

Filed under Coopetition, Microsoft, Novell

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