In First Quarter Report, Novell Says Product Revenue Grew 9 Percent Year Over Year

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<strong>Waltham, Mass. &ndash; Feb. 28</strong><br />Novell Inc. announced financial results for its first fiscal quarter ended Jan. 31. For the quarter, Novell reported net revenue of $231 million. This compares to net revenue of $218 million for the first fiscal quarter 2007. Income from operations for the first fiscal quarter 2008 was $8 million, compared to a loss from operations of $21 million for the first fiscal quarter 2007. Income from continuing operations in the first fiscal quarter 2008 was $15 million, or $0.04 per share. This compares to a loss from continuing operations of $12 million, or $0.04 loss per share, for the first fiscal quarter 2007. Foreign currency exchange rates favorably impacted revenue and unfavorably impacted operating expenses by $7 million and did not materially impact income from operations year over year. <br /><br />On a non-GAAP basis, income from operations for the first fiscal quarter 2008 was $24 million. This compares to non-GAAP loss from operations of $1 million in the year-ago quarter. Non-GAAP income from continuing operations for the first fiscal quarter 2008 was $29 million, or $0.08 per share. This compares to non-GAAP income from continuing operations of $3 million, or $0.01 per share, for the first fiscal quarter 2007. <br /><br />For the first fiscal quarter 2008, Novell reported $30 million of revenue from Open Platform Solutions of which $28 million was from Linux Platform Products, up 65 percent year over year. Revenue from identity and security management was $32 million, of which identity and access management was $28 million, up 15 percent year over year. Revenue from systems and resource management was $37 million, up 5 percent year over year. Workgroup revenue of $90 million was up 1 percent year over year. <br /> <br />&ldquo;We are very pleased with our results this quarter. We delivered product revenue growth across all business units and continued expense control this quarter,&rdquo; said Ron Hovsepian, president and CEO of Novell. &ldquo;These results are indicative that our strategic initiatives are yielding tangible results and that we are on the right path to achieve long-term, sustainable profitability.&rdquo; <br /><br />Cash, cash equivalents and short-term investments were $1.8 billion at Jan. 31, consistent with the year-ago quarter. Days sales outstanding in accounts receivable was 51 days at the end of the first fiscal quarter 2008, down from 57 days at the end of the year-ago quarter. Total deferred revenue was $723 million at the end of the first fiscal quarter 2008, down from $728 million at the end of the year-ago quarter. Cash flow from operations was a negative $26 million for the first fiscal quarter 2008, which includes $31 million in special-interest and restructuring payments. This compares to cash flow from operations of $348 million in the first fiscal quarter 2007, which includes the $348 million payment from Microsoft and $8 million in special interest payments. <br /><br />Full details on Novell&#39;s reported results, including a reconciliation of the non-GAAP results, are included in the financial schedules that are a part of this release. <br /><br /><strong>Financial Outlook </strong><br />As a result of our acquisition of PlateSpin and our first fiscal quarter 2008 performance, Novell management issues the following financial guidance for the full fiscal year 2008: Net revenue is expected to be between $940 million and $970 million, exceeding previously stated guidance of between $920 million and $945 million, and non-GAAP operating margin is expected to be between 7 and 9 percent, excluding all acquisition-related intangible asset amortization. <br />

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