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Novell Grows Its Linux Business

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So far so good for Novell.

For its first quarter 2008 results Novell reported growing income and revenues with a strong year over year showing from its Linux platform business. With Microsoft’s Windows Server 2008 set to enter the market, Novell’s CEO is optimistic that Novell will continue to grow its business even further.

Novell reported first quarter 2008 net revenue of $231 million which was up from $218 million in the first fiscal quarter of 2007.

[cob:Related_Stories]First-quarter net income was $16.8 million, ($0.05 cents per share), which is a turnaround from the net loss of $19.9 million ($0.06 cents per share), it reported for the first quarter of 2007.

Novell’s biggest year over year gains came from its Linux Platform Products group with $28 million in revenue a 65 percent year over year gain. Novell’s Workgroup products continued to represent the lion’s share of Novell’s revenues at $90 million for the first quarter of 2008 which was only a meager 1 percent year over year gain.

On a conference call discussing the financial results Novell CEO Ron Hovsepian was quick to note that Novell’s Linux business had a great quarter. Part of Novell’s continued Linux success comes from its partnership with Microsoft which began in November of 2006.

“Our partnership with Microsoft continues its momentum,” Hovsepian said. He added that barely into the second year of the deal, Novell has earned $141 million from the deal, which is roughly 59 percent of what the five year agreement stipulates.

Hovsepian also noted that he sees continued upside potential from customers that come as a result of the Microsoft deal.

“We absolutely are seeing upselling opportunities inside those relationships,” Hovespian said. “As we add thousands of new customers we’re making sure we focus the teams to expand relationships inside those customers.”

Novell’s CEO was also optimistic about his firm’s Linux prospects in the face of Microsoft’s new Windows Server 2008 release. Hovespian commented that he expects that initially Microsoft will be targeting the installed Microsoft server base to get them to upgrade.

“Microsoft is managing the outward competition but they are also managing their older installed base and the different versions that they are on,” Hovespian said. “We see that as opportunity for our company to attack that installed base. I’m sure the competitive fires will remain strong between both companies.” Earlier this week, Novell announced that it would be acquiring virtualization management vendor PlateSpin for $205 million. Novell also acquired open source collaboration vendor SiteScape earlier in the month.

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