Management Toolkit

Novell ditches top execs

Graeme Wearden and David Meyer ZDNet.co.uk

Published: 22 Jun 2006 13:50 BST

The board of Novell has dismissed two top executives, including chief executive Jack Messman,as part of a management shake-up at the software and networking firm.

Novell announced on Thursday that Messman and chief finance officer Joseph Tibbetts had both had their employment terminated with immediate effect.

Ronald Hovsepian, Novell's president and chief operating officer, has been appointed chief executive, and Dana Russell, Novell's current vice-president of finance and corporate controller, has been appointed interim CFO while the company conducts a search for a permanent replacement.

Messman will remain on Novell's board of directors until 31 Oct 2006.

In a conference call on Thursday afternoon, Plaskett insisted that Messman and Tibbett's departures were unconnected to any financial problems at Novell.

"The board's decision was based purely on an evaluation of who is best suited to lead the company going forward at this time in the company's development. There are no accounting issues or other improprieties that have contributed," said Plaskett.

Hovsepian said that he was "privileged and excited by the opportunity".

"We still have a lot of work to do. As chief executive my top priority will be to accelerate the speed and urgency behind our business strategy," said Hovsepian.

In recent months, Novell has faced growing criticism. On 1 June, its share price plunged 15 percent after it released its second-quarter financial results in which income was down $19m year-on-year.

Jason Maynard, analyst at Credit Suisse First Boston, downgraded Novell's stock from outperform to neutral in response, saying Novell had lost its chance to compete closely with Red Hat in the Linux market.

During Thursday's conference call, Hovsepian said that Novell could win more Linux customers on the back of the launch of Microsoft's Vista operating system.

"There's the possibilities of customers using us for desktop Linux in certain segments of their business. We’ve been getting real positive information back on that," said Hovsepian.James Governor, analyst at RedMonk, said that Messman's departure had been partly forced by investment analysts who weren't impressed by Novell's performance against Red Hat.

"In a market of two key companies you don’t want to be seen as the one not winning, especially as Red Hat is comparatively coming from a standing start," said Governor.

But Governor added that investors may have been too ambitious in their expectations."You can’t expect piles of cash from an open source subscription model. Red Hat's revenues are laughable compared to Symantec and Adobe."

"Expecting Novell to be able to generate huge profits and margins on a subscription model was always going to be difficult," said Governor.