Novell Issues Warning on 2nd-Quarter Performance

Novell Inc., maker of network software to link computer systems, warned that its fiscal second-quarter earnings and revenue will be less than half what analysts had expected because of slowing sales. Novell said sales were hurt in part by the introduction of Microsoft Corp.’s Windows 2000 operating system, which includes programs that compete with Novell. Growing use of the Linux operating system in server-based computer systems also led some customers to delay or cancel Novell purchases, the company said. “The issues are broad and include poor quarter management and delay in effective sales segmentation,” said Chief Financial Officer Dennis Raney. He declined to comment on whether the sales slowdown and the continued reorganization of Novell’s sales force would lead to lower-than-expected revenue for the rest of the year. Novell said it will report earnings of 8 cents a share, contrasted with the 16-cent average analyst forecast, and revenue of just over $300 million, when it issues its results on May 23. In the year-ago quarter, Novell earned 11 cents a share on sales of $316 million. Novell shares were halted on Nasdaq pending the profit warning. When trading resumed, shares fell $4.81, or 27%, to $12.75. In regular trading, Novell fell $1.38 to close at $17.56.