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Novell to cut 1,000 workers
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May 28, 1997: 6:42 p.m. ET
Software firm posts second-quarter loss; third-quarter loss expected
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NEW YORK (CNNfn) - Networking software giant Novell Inc. posted an unexpected second-quarter loss of 4 cents per share Wednesday and said it will cut 1,000 employees -- or 18 percent of its workforce -- and take a restructuring charge of $25 million to $35 million in its third quarter.
In addition, Novell said it will not ship additional products to distributors in the third quarter in an effort to reduce inventories. The moves will result in a third-quarter loss and substantially lower revenue.
The announcement came after the close of trading Wednesday, which saw Novell's stock remain unchanged at 8-1/16. The second-quarter loss of $14.6 million, or 4 cents per share, was smaller than Novell's quarterly loss of $55.4 million, or 15 cents per share, one year ago.
After the cuts, "Novell will be a more streamlined, tightly managed and responsive organization," Chairman and CEO Eric Schmidt said in a statement.
Novell currently employs about 5,800 people.
The moves will not affect the delivery of products already in the production pipeline, including BorderManager and Novel Directory Services for Microsoft NT Server, Novell said.
Novell's loss reflects disappointing sales of software to distributors and lower licensed revenue of certain older products, the company said.
A company official who declined to be identified said he did not know if Novell planned any further cuts or in which areas of the software developer the layoffs would come.
Over the years, Novell, which once boasted more than 50 million licensed users of its flagship NetWare network operating system, has witnessed its share of the networking software market dwindle as it raced to keep up with new technologies.
Recently, however, Novell has upgraded its software with options that help NetWare users connect their local area networks to the Internet and to corporate intranets.
The restructuring comes two months after Novell named Schmidt, formerly Sun Microsystems Inc.'s chief technology officer, to its top post. 
--Will Morton
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Novell Inc.
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