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News > Companies
Novell slashes jobs
September 6, 2000: 9:25 a.m. ET

Network software maker to cut 16% of work force, take $45M charge
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NEW YORK (CNNfn) - The troubled software maker Novell Inc. said Wednesday it will cut 900 jobs, or 16 percent of its work force, and take a restructuring charge of about $45 million in its fiscal fourth quarter.

The job cuts, which were widely expected, come after the Provo, Utah-based maker of Internet software reported that third quarter profits tumbled 83 percent to $8.6 million and earnings per share sank to 3 cents from 14 cents a year earlier -- although the results did top Wall Street forecasts.

Novell said Wednesday's restructuring is expected to cut costs by roughly $25 million a quarter starting the next fiscal year.  

Morgan Stanley analyst Chuck Phillips told CNNfn.com that he expected an announcement since the company had discussed making changes. "It's in line with them getting the cost down to the reality of what their revenue opportunities are," Phillips said.

"This doesn't solve their problems long-term, but you can't continue to run a business and ignore the fact that your top line isn't there, so I think it's a pragmatic move. They probably can't cut their way to prosperity - sooner or later they're going to have to get their revenue line growing," Phillips said.

graphic"We're reducing expenses overall, and we are also freeing up dollars to spend on key sales, marketing and development initiatives that are part of our strategic focus," Novell Chairman Eric Schmidt said in a statement. 

Philliips doesn't see Wednesday's moves as solving Novell's woes, given the company's persistent misses in product development, but sees this as a positive first step.

"There's no quick fix because product opportunities and market shifts took years to develop and they missed them and continued to go in the wrong direction. It's hard to quickly correct that, and I think if it's going to be fixable it's going to take some time and probably involve some acquisitions," he said.

Novell  (NOVL: Research, Estimates) fell $1.13, or 9 percent, to $11.06 Tuesday. Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.