NOVELL INC - FORM 8-K - EX-99.1 - NOVELL Q4 FY10 EARNINGS RELEASE

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8-K - NOVELL Q4 FY10 EARNINGS RELEASE 8-K - NOVELL INC	q4fy10_8k.htm

FOR IMMEDIATE RELEASE

December 2, 2010

Novell Reports Financial Results for Fourth Fiscal Quarter and Full Fiscal Year 2010

WALTHAM, Mass. – December 2, 2010 - Novell, Inc. (NASDAQ: NOVL) today announced financial results for its fourth fiscal quarter and full fiscal year ended October 31, 2010. For the quarter, Novell reported net revenue of $207 million. This compares to net revenue of $216 million for the fourth fiscal quarter of 2009. GAAP income from operations for the fourth fiscal quarter of 2010 was $22 million. This compares to GAAP loss from operations of $259 million for the fourth fiscal quarter of 2009, which included a $279 million non-cash impairment charge to goodwill and intangible assets. GAAP net income in the fourth fiscal quarter of 2010 was $322 million, or $0.91 per share, which included $308 million in non-cash tax provision benefits, principally to release a valuation allowance for certain net deferred tax assets. This compares to a GAAP net loss of $256 million, or a $0.74 loss per share, for the fourth fiscal quarter of 2009. Foreign currency exchange rates favorably impacted net revenue by $1 million, operating expenses by $1 million and income from operations by $2 million compared to the same period last year.

On a non-GAAP basis, income from operations for the fourth fiscal quarter of 2010 was $38 million. This compares to non-GAAP income from operations of $37 million in the same period last year. Non-GAAP net income for the fourth fiscal quarter of 2010 was $25 million, or $0.07 per share. This compares to non-GAAP net income of $38 million, or $0.11 per share, for the fourth fiscal quarter of 2009. A reconciliation of GAAP to non-GAAP results is provided in the financial schedules as part of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

For the full fiscal year 2010, Novell reported net revenue of $812 million and GAAP income from operations of $84 million. Comparatively, net revenue for the full fiscal year 2009 was $862 million and GAAP loss from operations was $206 million, which included a $279 million non-cash impairment charge to goodwill and intangible assets. GAAP net income for the full fiscal year 2010 was $378 million or $1.07 per share, which included $308 million in non-cash tax provision benefits, principally to release a valuation allowance for certain net deferred tax assets. This compares to a net loss of $213 million, or a $0.62 loss per share, for the full fiscal year 2009. Foreign currency exchange rates favorably impacted net revenue by $4 million and unfavorably impacted operating expenses by $10 million and income from operations by $6 million compared to the prior fiscal year.

Page 2 of 12

On a non-GAAP basis, income from operations for the full fiscal year 2010 was $131 million. This compares to non-GAAP income from operations of $139 million in the prior year. Non-GAAP net income for the full fiscal year 2010 was $97 million, or $0.27 per share. This compares to non-GAAP net income of $117 million, or $0.34 per share, for the full fiscal year 2009.

“I am pleased with our fourth quarter performance,” said Ron Hovsepian, President and CEO of Novell. “We continue to see strong performance from our Linux business with invoicing for Linux, excluding Microsoft certificates, up over 40% from the year ago period and the prior fiscal year. We also saw some stabilization in the Collaboration Solutions business with invoicing decreasing 3% over the year ago period. In addition, we continue to invest in the business while improving our GAAP and non-GAAP operating margins, which were 11% and 19%, respectively, for the quarter. Finally, we were profitable on a GAAP net income basis for the quarter and for the full year, even excluding discrete tax items.”

Cash, cash equivalents and short-term investments were $1.1 billion at October 31, 2010, up from $1.0 billion last quarter. Days sales outstanding in accounts receivable was 76 days at the end of the fourth fiscal quarter of 2010, up from 75 days at the end of the year-ago quarter. Total deferred revenue was $651 million at the end of the fourth fiscal quarter of 2010, down from $689 million at the end of the year-ago quarter. For the fourth fiscal quarter of 2010, cash flow from operations was $52 million. This compares to cash flow from operations of $51 million for the fourth fiscal quarter of 2009. For the full fiscal year 2010, cash flow from operations was $76 million. This compares to cash flow from operations of $69 million for the full fiscal year 2009.

Further details on Novell's reported results are included in the financial schedules that are a part of this release.

In addition, as previously publicly disclosed, Novell entered into an Agreement and Plan of Merger, dated as of November 21, 2010, with Attachmate Corporation, a Washington corporation, and Longview Software Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Attachmate, upon the terms and subject to the conditions of which, Longview will be merged with and into Novell, with Novell continuing as the surviving corporation and a wholly-owned subsidiary of Attachmate.

Page 3 of 12

Non-GAAP Financial Measures

We supplement our consolidated unaudited condensed financial statements presented in accordance with GAAP with certain non-GAAP financial measures. These non-GAAP measures include adjusted income from operations, adjusted operating margin, adjusted income from continuing operations, adjusted net income, adjusted income per share from continuing operations and adjusted net income per share. We provide non-GAAP financial measures to enhance an overall understanding of our current financial performance and prospects for the future and to enable investors to evaluate our performance in the same way that management does. Management uses these same non-GAAP financial measures to evaluate performance, allocate resources, and determine compensation. The non-GAAP financial measures do not replace the presentation of our GAAP financial results, but they eliminate expenses and gains that are excluded from most analysts' consensus estimates, that are unusual, and/or that arise outside of the ordinary course of business, such as, but not limited to, those related to stock-based compensation, acquisition-related intangible asset amortization, restructuring, asset impairments, litigation judgments and settlements, strategic alternatives review, the sale of business operations, long-term investments, property, plant and equipment, and unusual and discrete income tax effects.

Legal Notice Regarding Forward-Looking Statements

This press release may include statements that are not historical in nature and that may be characterized as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including those related to future financial and operating results, targets, and prospects; future opportunities; market leadership and positioning; short-term and long-term trends; the macroeconomic environment; customer priorities; timing of realization of projections; functionality, characteristics, quality and performance capabilities of Novell's products and technology; and results achievable and benefits attainable through deployment of Novell's products and provision of services. Forward-looking statements forecasting growth in financial metrics are predicated on assumptions regarding improvements in the overall economy and the markets served by the Company and in which the Company operates, the timing of which are impossible to accurately predict. Actual results may differ materially from the results discussed in or implied by such forward-looking statements, which are based upon information that is currently available to us and/or management’s current expectations and speak only as of the date hereof. We are subject to a number of risks, including, among others, the risk that the merger may be delayed or may not be consummated, the risk that the definitive merger agreement may be terminated in circumstances that require Novell to pay Attachmate a termination fee of $60 million; risks related to the diversion of management’s attention from Novell’s ongoing business operations; risks regarding the failure of Attachmate to obtain the necessary financing to complete the merger; the effect of the announcement of the merger on Novell’s business relationships (including, without limitation, partners and customers), operating results and business generally; and risks related to obtaining the requisite consents to the merger, including, without limitation, the timing (including possible delays) and receipt of regulatory approvals from various governmental entities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental entities may deny approval, as well as risks related to indirect sales, growth rates of our business units, renewal of SUSE® Linux Enterprise Server subscriptions with customers who have received certificates from Microsoft, decline rates of Open Enterprise Server and NetWare® revenue, development of products and services, the intelligent workload management market, software vulnerabilities, delays in product releases, reliance on open source software, adequacy of renewal rates, uncertain economic conditions, competition, rapid technological changes, failure to expand brand awareness, adequacy of technical support, pricing pressures, system failures, integration of acquisitions, industry consolidation, challenges resulting from a global business, foreign research and development operations, loss of key employees, intellectual property infringement, litigation matters, unpredictable financial results, impairments, the timing of revenue recognition, our investments and effective use of our cash.

Page 4 of 12

A detailed discussion of these and other factors that could affect our results is included in our SEC filings, including, but not limited to, our Quarterly Report on Form 10-Q for the period ended April 30, 2010 filed with the SEC on June 8, 2010 and our Current Report on Form 8-K filed with the SEC on November 22, 2010 (as amended), which may be obtained by calling (800) 317- 3195, or at our Investor Relations web page at: www.novell.com/company/ir.

We expressly disclaim any obligation, except as required by law, or undertaking to update or revise any forward-looking statements contained in this press release to reflect any change of expectations with regard thereto or to reflect any change in events, conditions, or circumstances on which any such forward-looking statement is based, in whole or in part.

Additional Information About the Merger and Where to Find It

In connection with the merger, Novell intends to file relevant materials with the SEC, including a proxy statement. Investors and security holders of Novell are urged to read these documents (if and when they become available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about Novell, the merger and the other parties to the merger. Investors and security holders may obtain these documents (and any other documents filed by Novell and Attachmate with the SEC) free of charge at the SEC’s website at http://www.sec.gov. In addition, the documents filed with the SEC by Novell may be obtained free of charge by directing such request to: Novell Investor Relations at 1-800-317-3195 or from the investor relations portion of Novell’s website at http://www.novell.com/company/ir/. Investors and security holders are urged to read the definitive proxy statement and the other relevant materials when they become available before making any voting or investment decision with respect to the merger.

Page 5 of 12

Novell and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Novell’s stockholders in respect of the merger. Information regarding Novell’s directors and executive officers is contained in Novell’s Annual Report on Form 10-K for the fiscal year ended October 31, 2009, its proxy statement for its 2010 Annual Meeting of Stockholders, dated February 26, 2010, and subsequent filings which Novell has made with the SEC. Stockholders may obtain additional information about the directors and executive officers of Novell and their respective interests with respect to the merger by security holdings or otherwise, which may be different than those of Novell’s stockholders generally, by reading the definitive proxy statement and other relevant documents regarding the merger, when filed with the SEC. Each of these documents is, or will be, available as described above.

About Novell

Novell, Inc. (NASDAQ: NOVL), a leader in intelligent workload management, through WorkloadIQTM, helps organizations securely deliver and manage computing services across physical, virtual and cloud computing environments. We help customers reduce the cost, complexity, and risk associated with their IT systems through our solutions for identity and security, systems management, collaboration and Linux-based operating platforms. With our infrastructure software and ecosystem of partnerships, Novell integrates mixed IT environments, allowing people and technology to work as one. For more information, visit www.novell.com.

NetWare, Novell, the Novell logo, the N Logo, and SUSE are registered trademarks and WorkloadIQ is a trademark of Novell, Inc. in the United States and other countries. All third party trademarks are the property of their respective owners.

Press Contact:	Investor Relations Contact:
Ian Bruce	Robert Kain
Novell, Inc.	Novell, Inc.
Phone: 781-464-8034	Phone: 800-317-3195
E-Mail: ibruce@novell.com	E-Mail: rkain@novell.com

Page 6 of 12
Novell, Inc.
Consolidated Unaudited Condensed Statements of Operations
(In thousands, except per share data)


	Fiscal Quarter Ended						Fiscal Year Ended
	Oct 31, 2010			Oct 31, 2009			Oct 31, 2010			Oct 31, 2009
Net revenue:
Software licenses	$	31,256		$	31,382		$	105,108		$	116,919
Maintenance and subscriptions		153,277			159,902			618,542			640,745
Services (1)		21,978			24,351			88,221			104,521
Total net revenue		206,511			215,635			811,871			862,185

Cost of revenue:
Software licenses		2,538			2,967			8,506			9,174
Maintenance and subscriptions		22,517			24,276			88,447			92,613
Services		20,013			20,426			76,652			85,044
Total cost of revenue		45,068			47,669			173,605			186,831

Gross profit		161,443			167,966			638,266			675,354

Operating expenses:
Sales and marketing		67,841			68,760			282,402			295,998
Product development		41,718			45,756			160,188			181,383
General and administrative		23,652			26,948			101,118			102,172
Other operating expenses (2)		6,225			285,636			10,121			302,293
Total operating expenses		139,436			427,100			553,829			881,846

Income (loss) from operations		22,007			(259,134	)		84,437			(206,492	)
Operating margin %		10.7	%		-120.2	%		10.4	%		-23.9	%

Other income, net:
Interest income, net		2,588			3,208			10,790			15,275
Other income (expense)		353			(2,392	)		6,860			(12,757	)
Total other income, net		2,941			816			17,650			2,518

Income (loss) from continuing operations before taxes		24,948			(258,318	)		102,087			(203,974	)

Income tax (benefit) expense		(296,640	)		(2,629	)		(275,279	)		10,666

Income (loss) from continuing operations		321,588			(255,689	)		377,366			(214,640	)

Income from discontinued operations		610			-			610			1,904

Net income (loss)	$	322,198		$	(255,689	)	$	377,976		$	(212,736	)


Diluted earnings (loss) per share:

Continuing operations	$	0.90		$	(0.74	)	$	1.07		$	(0.62	)

Net income (loss)	$	0.91		$	(0.74	)	$	1.07		$	(0.62	)

Weighted average shares		356,010			347,043			353,447			345,493


(1) Services includes professional services, technical support and training services.
(2) See Page 9 of 12 for a detail of other operating expenses.


Revisions were made to prior period amounts in order to conform to the current period's presentation.

Page 7 of 12
Novell, Inc.
Consolidated Unaudited Condensed Balance Sheets
(In thousands)


	Oct 31, 2010		Oct 31, 2009
Assets

Current assets:
Cash and cash equivalents	$	685,594	$	591,656
Short-term investments		441,096		391,809
Restricted cash		-		53,033
Receivables, net		171,607		177,898
Prepaid expenses		16,233		17,708
Current deferred income taxes		49,169		5,521
Other current assets		33,725		26,747
Total current assets		1,397,424		1,264,372

Property, plant and equipment, net		156,033		170,459
Long-term investments		-		10,303
Goodwill		353,415		356,033
Intangible assets, net		28,746		36,621
Deferred income taxes		243,583		26,717
Other assets		46,797		38,403

Total assets	$	2,225,998	$	1,902,908


Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable	$	26,785	$	37,628
Accrued compensation		83,181		87,928
Other accrued liabilities		86,223		97,154
Deferred revenue		487,590		495,245
Total current liabilities		683,779		717,955

Deferred income taxes		7,622		8,403
Other long-term liabilities		35,655		48,502
Long-term deferred revenue		163,394		193,526

Total liabilities		890,450		968,386

Stockholders' equity		1,335,548		934,522

Total liabilities and stockholders' equity	$	2,225,998	$	1,902,908

Revisions were made to prior period amounts in order to conform to the current period's presentation.

Page 8 of 12
Novell, Inc.
Consolidated Unaudited Condensed Statements of Cash Flows
(In thousands)


	Fiscal Quarter Ended						Fiscal Year Ended
	Oct 31, 2010			Oct 31, 2009			Oct 31, 2010			Oct 31, 2009

Cash flows from operating activities
Net income (loss)	$	322,198		$	(255,689	)	$	377,976		$	(212,736	)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Stock-based compensation expense		8,232			5,683			29,057			25,881
Depreciation and amortization		7,896			9,657			30,298			40,675
Change in accounts receivable allowances		(1,166	)		827			(1,833	)		444
Utilization of previously reserved acquired net operating losses		-			2,125			-			2,580
Net gain on sale of property, plant and equipment		-			(2,199	)		-			(2,199	)
Gain on debenture repurchases		-			-			-			(11	)
Income from discontinued operations		(610	)		-			(610	)		(1,904	)
Impairment of long-term investments		-			-			-			5,466
Net gain on sale of previously impaired investments		(218	)		(300	)		(7,413	)		(300	)
Impairment of goodwill and intangible assets		-			279,135			-			279,135
Gain on sale of subsidiaries		-			-			-			(16	)
Deferred income taxes		(272,654	)		(3,071	)		(261,878	)		8,610
Changes in assets and liabilities, excluding the
effect of acquisitions and dispositions		(12,085	)		15,250			(90,050	)		(76,855	)

Net cash provided by operating activities		51,593			51,418			75,547			68,770

Cash flows from investing activities
Purchases of property, plant and equipment		(2,410	)		(7,324	)		(17,648	)		(22,087	)
Net proceeds from the sale of property, plant and equipment		-			10,748			-			10,748
Short-term investment activity		(1,936	)		(5,199	)		(42,663	)		5,100
Long-term investment activity		218			300			8,847			4,209
Change in restricted cash		17,723			(25	)		53,033			(332	)
Cash proceeds from sale of discontinued operations		233			-			938			1,036
Net cash paid for acquisitions		-			-			-			(48,472	)
Other		6,520			1,330			7,899			7,228

Net cash provided by (used in) investing activities		20,348			(170	)		10,406			(42,570	)

Cash flows from financing activities
Issuances of common stock		1,292			641			8,940			3,566
Excess tax effects from stock-based compensation		2,226			13			2,226			(2,775	)
Debt repayment		-			(4,087	)		-			(4,658	)
Debenture repurchases		-			-			-			(125,537	)

Net cash provided by (used in) financing activities		3,518			(3,433	)		11,166			(129,404	)

Effect of exchange rate changes on cash		5,085			6,977			(3,181	)		14,826
Increase (decrease) in cash and cash equivalents		80,544			54,792			93,938			(88,378	)
Cash and cash equivalents - beginning of period		605,050			536,864			591,656			680,034

Cash and cash equivalents - end of period	$	685,594		$	591,656		$	685,594		$	591,656

Page 9 of 12
Novell, Inc.
Unaudited Non-GAAP Adjusted Income From Operations
(In thousands)


	Fiscal Quarter Ended						Fiscal Year Ended
	Oct 31, 2010			Oct 31, 2009			Oct 31, 2010			Oct 31, 2009

GAAP income (loss) from operations	$	22,007		$	(259,134	)	$	84,437		$	(206,492	)

Adjustments:
Stock-based compensation expense:
Cost of revenue		876			512			3,053			2,649
Sales and marketing		2,385			1,659			8,038			7,015
Product development		2,151			1,721			8,227			9,332
General and administrative		2,820			1,791			9,739			6,885
Sub-total		8,232			5,683			29,057			25,881

Acquisition-related intangible asset amortization:
Cost of revenue		1,129			2,098			4,895			9,984
Sales and marketing		630			2,706			2,980			7,296
Sub-total		1,759			4,804			7,875			17,280

Other operating expenses (income):
Restructuring expense		-			8,700			2,774			25,200
Strategic alternatives review expense		6,225			-			9,222			-
Litigation related activity		-			-			(1,875	)		-
Gain on sale of subsidiaries		-			-			-			(16	)
Net gain on sale of property, plant and equipment		-			(2,199	)		-			(2,199	)
IT outsourcing transition costs		-			-			-			173
Impairment of goodwill and intangible assets		-			279,135			-			279,135
Sub-total		6,225			285,636			10,121			302,293


Total operating adjustments		16,216			296,123			47,053			345,454

Non-GAAP income from operations	$	38,223		$	36,989		$	131,490		$	138,962

Non-GAAP operating margin %		18.5	%		17.2	%		16.2	%		16.1	%



Novell, Inc.
Unaudited Non-GAAP Adjusted Net Income
(In thousands, except per share data)


	Fiscal Quarter Ended						Fiscal Year Ended
	Oct 31, 2010			Oct 31, 2009			Oct 31, 2010			Oct 31, 2009

GAAP net income (loss)	$	322,198		$	(255,689	)	$	377,976		$	(212,736	)


Operating adjustments (detailed above)		16,216			296,123			47,053			345,454
Non-operating expenses (income) adjustments:
Net gain on sale of previously impaired investments		(218	)		(300	)		(7,413	)		(300	)
Gain on debenture repurchases		-			-			-			(11	)
Impairment of long-term investments		-			-			-			5,466
Sub-total		(218	)		(300	)		(7,413	)		5,155

Total pre-tax adjustments		15,998			295,823			39,640			350,609

Income tax adjustments		(312,118	)		(2,130	)		(320,153	)		(19,219	)

Income from discontinued operations		(610	)		-			(610	)		(1,904	)

Total net adjustments		(296,730	)		293,693			(281,123	)		329,486

Non-GAAP net income and non-GAAP income
from continuing operations	$	25,468		$	38,004		$	96,853		$	116,750


GAAP net income (loss) per share	$	0.91		$	(0.74	)	$	1.07		$	(0.62	)
Total adjustments detailed above		(0.84	)		0.85			(0.80	)		0.96

Non-GAAP net income per share and non-GAAP
income from continuing operations per share	$	0.07		$	0.11		$	0.27		$	0.34


GAAP weighted average shares		356,010			347,043			353,447			345,493

Change from basic to diluted weighted average shares		-			1,707			-			2,328

Non-GAAP weighted average shares		356,010			348,750			353,447			347,821

Page 10 of 12
Novell, Inc.
Consolidated Unaudited Condensed Segment Results
(in thousands)


	Fiscal Quarter Ended October 31, 2010

	Security,
	Management and				Collaboration				Common
	Operating Platforms		%		Solutions		%		Unallocated			Total		%
Net revenue:
Software licenses	$	18,915		14.7	$	12,341		15.8	$	-		$	31,256		15.1
Maintenance and subscriptions		93,360		72.8		59,917		76.6		-			153,277		74.2
Services		16,044		12.5		5,934		7.6		-			21,978		10.6
Total net revenue		128,319		100.0		78,192		100.0		-			206,511		100.0

Cost of revenue:
Software licenses		1,938		1.5		408		0.5		192			2,538		1.2
Maintenance and subscriptions		14,546		11.3		6,822		8.7		1,149			22,517		10.9
Services		14,627		11.4		4,722		6.0		664			20,013		9.7
Total cost of revenue		31,111		24.2		11,952		15.3		2,005			45,068		21.8

Gross profit		97,208		75.8		66,240		84.7		(2,005	)		161,443		78.2

Operating expenses:
Sales and marketing		52,139		40.6		12,687		16.2		3,015			67,841		32.9
Product development		31,239		24.3		8,328		10.7		2,151			41,718		20.2
General and administrative		13,419		10.5		7,413		9.5		2,820			23,652		11.5
Other operating expenses		-		-		-		-		6,225			6,225		3.0
Total operating expenses		96,797		75.4		28,428		36.4		14,211			139,436		67.5

Income (loss) from operations	$	411		0.3	$	37,812		48.4	$	(16,216	)	$	22,007		10.7

	Fiscal Quarter Ended July 31, 2010

	Security,
	Management and						Collaboration				Common
	Operating Platforms			%			Solutions		%		Unallocated			Total		%
Net revenue:
Software licenses	$	15,819			12.8		$	9,149		12.1	$	-		$	24,968		12.5
Maintenance and subscriptions		92,333			74.8			60,126		79.7		-			152,459		76.6
Services		15,354			12.4			6,199		8.2		-			21,553		10.8
Total net revenue		123,506			100.0			75,474		100.0		-			198,980		100.0

Cost of revenue:
Software licenses		1,842			1.5			325		0.4		188			2,355		1.2
Maintenance and subscriptions		14,428			11.7			6,755		9.0		1,350			22,533		11.3
Services		13,165			10.7			4,834		6.4		620			18,619		9.4
Total cost of revenue		29,435			23.8			11,914		15.8		2,158			43,507		21.9

Gross profit		94,071			76.2			63,560		84.2		(2,158	)		155,473		78.1

Operating expenses:
Sales and marketing		54,949			44.5			13,708		18.2		2,135			70,792		35.6
Product development		29,720			24.1			7,743		10.3		1,937			39,400		19.8
General and administrative		13,854			11.2			7,615		10.1		1,836			23,305		11.7
Other operating expenses		-			-			-		-		878			878		0.4
Total operating expenses		98,523			79.8			29,066		38.5		6,786			134,375		67.5

Income (loss) from operations	$	(4,452	)		(3.6	)	$	34,494		45.7	$	(8,944	)	$	21,098		10.6

	Fiscal Quarter Ended October 31, 2009

	Security,
	Management and						Collaboration				Common
	Operating Platforms			%			Solutions		%		Unallocated			Total			%
Net revenue:
Software licenses	$	19,430			14.8		$	11,952		14.2	$	-		$	31,382			14.6
Maintenance and subscriptions		94,189			71.6			65,713		78.1		-			159,902			74.2
Services		17,859			13.6			6,492		7.7		-			24,351			11.3
Total net revenue		131,478			100.0			84,157		100.0		-			215,635			100.0

Cost of revenue:
Software licenses		2,247			1.7			384		0.5		336			2,967			1.4
Maintenance and subscriptions		14,816			11.3			7,603		9.0		1,857			24,276			11.3
Services		14,908			11.3			5,101		6.1		417			20,426			9.5
Total cost of revenue		31,971			24.3			13,088		15.6		2,610			47,669			22.1

Gross profit		99,507			75.7			71,069		84.4		(2,610	)		167,966			77.9

Operating expenses:
Sales and marketing		51,305			39.0			13,090		15.6		4,365			68,760			31.9
Product development		35,077			26.7			8,958		10.6		1,721			45,756			21.2
General and administrative		16,294			12.4			8,863		10.5		1,791			26,948			12.5
Other operating expenses		-			-			-		-		285,636			285,636			132.5
Total operating expenses		102,676			78.1			30,911		36.7		293,513			427,100			198.1

Income (loss) from operations	$	(3,169	)		(2.4	)	$	40,158		47.7	$	(296,123	)	$	(259,134	)		(120.2	)



Revisions were made to prior period amounts in order to conform to the current period's presentation.

Page 11 of 12
Novell, Inc.
Unaudited Trended Segment Revenue by Software Licenses and Maintenance and Services
(In thousands)


																					Change from
		Q4 2009	%			Fiscal Year 2009	%			Q3 2010	%			Q4 2010	%			Fiscal Year 2010	%		Q4 2009 to Q4 2010					FY 2009 to FY 2010
Security, management and operating platforms
Open platform solutions
Linux platform products
Software licenses	$	-		-	$	-		-	$	-		-	$	-		-	$	-		-	$	-		-		$	-		-
Maintenance and subscriptions		39,011		18.1		149,162		17.3		35,506		17.8		36,256		17.6		144,411		17.8		(2,755	)	(7.1	)		(4,751	)	(3.2	)
		39,011		18.1		149,162		17.3		35,506		17.8		36,256		17.6		144,411		17.8		(2,755	)	(7.1	)		(4,751	)	(3.2	)
Other open platform products
Software licenses		21		0.0		125		0.0		1		0.0		70		0.0		109		0.0		49		233.3			(16	)	(12.8	)
Maintenance and subscriptions		1,979		0.9		7,592		0.9		2,108		1.1		2,505		1.2		8,088		1.0		526		26.6			496		6.5
		2,000		0.9		7,717		0.9		2,109		1.1		2,575		1.2		8,197		1.0		575		28.8			480		6.2


Total open platform solutions		41,011		19.0		156,879		18.2		37,615		18.9		38,831		18.8		152,608		18.8		(2,180	)	(5.3	)		(4,271	)	(2.7	)


Identity and security management
Identity, access and compliance management
Software licenses		10,360		4.8		31,908		3.7		7,991		4.0		10,912		5.3		34,508		4.3		552		5.3			2,600		8.1
Maintenance and subscriptions		19,606		9.1		80,340		9.3		22,502		11.3		21,856		10.6		88,637		10.9		2,250		11.5			8,297		10.3
		29,966		13.9		112,248		13.0		30,493		15.3		32,768		15.9		123,145		15.2		2,802		9.4			10,897		9.7
Other identity and security management
Software licenses		426		0.2		1,965		0.2		260		0.1		393		0.2		1,416		0.2		(33	)	(7.7	)		(549	)	(27.9	)
Maintenance and subscriptions		1,781		0.8		6,837		0.8		1,303		0.7		1,072		0.5		4,926		0.6		(709	)	(39.8	)		(1,911	)	(28.0	)
		2,207		1.0		8,802		1.0		1,563		0.8		1,465		0.7		6,342		0.8		(742	)	(33.6	)		(2,460	)	(27.9	)


Total identity and security management		32,173		14.9		121,050		14.0		32,056		16.1		34,233		16.6		129,487		15.9		2,060		6.4			8,437		7.0


Systems and resource management
Software licenses		8,623		4.0		33,806		3.9		7,567		3.8		7,540		3.7		29,549		3.6		(1,083	)	(12.6	)		(4,257	)	(12.6	)
Maintenance and subscriptions		31,812		14.8		126,963		14.7		30,914		15.5		31,671		15.3		126,502		15.6		(141	)	(0.4	)		(461	)	(0.4	)

Total systems and resource management		40,435		18.8		160,769		18.6		38,481		19.3		39,211		19.0		156,051		19.2		(1,224	)	(3.0	)		(4,718	)	(2.9	)



Total security, management and operating platforms		113,619		52.7		438,698		50.9		108,152		54.4		112,275		54.4		438,146		54.0		(1,344	)	(1.2	)		(552	)	(0.1	)


Collaboration solutions
OES and NetWare-related
Software licenses		5,504		2.6		20,232		2.3		5,225		2.6		6,128		3.0		20,831		2.6		624		11.3			599		3.0
Maintenance and subscriptions		38,080		17.7		157,524		18.3		35,161		17.7		35,478		17.2		144,794		17.8		(2,602	)	(6.8	)		(12,730	)	(8.1	)
		43,584		20.2		177,756		20.6		40,386		20.3		41,606		20.1		165,625		20.4		(1,978	)	(4.5	)		(12,131	)	(6.8	)
Collaboration
Software licenses		3,827		1.8		14,822		1.7		1,980		1.0		3,271		1.6		9,555		1.2		(556	)	(14.5	)		(5,267	)	(35.5	)
Maintenance and subscriptions		20,477		9.5		85,123		9.9		18,978		9.5		18,867		9.1		77,282		9.5		(1,610	)	(7.9	)		(7,841	)	(9.2	)
		24,304		11.3		99,945		11.6		20,958		10.5		22,138		10.7		86,837		10.7		(2,166	)	(8.9	)		(13,108	)	(13.1	)
Other collaboration solutions
Software licenses		2,621		1.2		14,061		1.6		1,944		1.0		2,942		1.4		9,140		1.1		321		12.2			(4,921	)	(35.0	)
Maintenance and subscriptions		7,156		3.3		27,204		3.2		5,987		3.0		5,572		2.7		23,902		2.9		(1,584	)	(22.1	)		(3,302	)	(12.1	)
		9,777		4.5		41,265		4.8		7,931		4.0		8,514		4.1		33,042		4.1		(1,263	)	(12.9	)		(8,223	)	(19.9	)


Total collaboration solutions		77,665		36.0		318,966		37.0		69,275		34.8		72,258		35.0		285,504		35.2		(5,407	)	(7.0	)		(33,462	)	(10.5	)


Total software licenses, maintenance
and subscriptions
Software licenses		31,382		14.6		116,919		13.6		24,968		12.5		31,256		15.1		105,108		12.9		(126	)	(0.4	)		(11,811	)	(10.1	)
Maintenance and subscriptions		159,902		74.2		640,745		74.3		152,459		76.6		153,277		74.2		618,542		76.2		(6,625	)	(4.1	)		(22,203	)	(3.5	)
Total product revenue		191,284		88.7		757,664		87.9		177,427		89.2		184,533		89.4		723,650		89.1		(6,751	)	(3.5	)		(34,014	)	(4.5	)

Services		24,351		11.3		104,521		12.1		21,553		10.8		21,978		10.6		88,221		10.9		(2,373	)	(9.7	)		(16,300	)	(15.6	)

Total net revenue	$	215,635		100.0	$	862,185		100.0	$	198,980		100.0	$	206,511		100.0	$	811,871		100.0	$	(9,124	)	(4.2	)	$	(50,314	)	(5.8	)

Page 12 of 12

Novell, Inc.
Major IT Software and Solutions Included Within Reported Line Items


	Security, Management and Operating Platforms

		Open Platform Solutions

			Linux Platform Products

				> SUSE LINUX Enterprise Server
				> SUSE LINUX Enterprise Desktop

			Other Open Platform Products

				> SUSE Engineering


		Identity and Security Management

			Identity, Access and Compliance Management

				> Identity Manager
				> SecureLogin
				> Access Manager
				> Sentinel

			Other Identity and Security Management

				> eDirectory


		Systems and Resource Management

			> ZENworks Suite
			> ZENworks Patch Management
			> ZENworks Asset Management
			> ZENworks Linux Management
			> ZENworks Configuration Management
			> PlateSpin
			> Business Service Management


	Collaboration Solutions

			Open Enterprise Server and NetWare-Related

				> Open Enterprise Server (OES)
				> NetWare
				> Cluster Services

			Collaboration

				> GroupWise
				> Teaming + Conferencing

			Other Collaboration Solutions

				> BorderManager


	Services

			> Professional Services
			> Technical Support Services
			> Training Services

Attached files

NOVELL INC Reports

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