Novell reports leap in Linux revenues

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• Red Hat

Colin Barker ZDNet.co.uk

Published: 05 Dec 2008 17:40 GMT

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Novell's Linux business grew by 33 percent over the fourth quarter last year, according to the company's latest financial figures. Identity and access management revenues were up 11 percent compared to the same period last year, and systems and resource management revenues climbed 15 percent.

The quarterly results, released on Friday, show that just two areas declined. Novell's Workgroup business fell by nine percent, while its services business plunged by 26 percent.

Overall, the company showed a quarterly loss of $16m (£10.9m), less than the $18m loss in the same quarter last year. Total revenue for the quarter was $243m, $7m less than analysts expected. There was a six percent increase in the company's product revenue for the quarter, and a three percent rise in total revenue for fiscal year 2008.

The company's Linux business, built on the success of Suse Linux, grew to $195m for the quarter. According to Sean McCarry, Novell director for the UK and Ireland, much of the growth is due to the company's reseller relationship with Microsoft.

"Microsoft is the world's largest reseller of Suse," McCarry told ZDNet UK. "The $195m comes out of the $240m we agreed with [Microsoft] when we set out on this path. That's 81 percent."

According to McCarry "most of that business is from the datacentre".

Much of the business is a result of customers replacing products from competitors, especially Red Hat, McCarry said.

Asked about the decline in areas such as services, McCarry said that Novell had previously predicted a fall. "We have refocused our services business so that it is targeted at partners," he said. "We have shifted the business so that, more and more, it is handled by partners. We have built up a network and we have got 20 new ones in this quarter."

The company is now focused on three areas, McCarry said: identity management, security and reducing complexity. The latter has been "a real growth area", he said.

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