Novell is to eliminate 900 jobs, or about 16 percent of its worldwide work force, in an effort to reduce costs.
The company said it would take a pre-tax charge of between $40 and $50 million in its fourth fiscal quarter, ending October 31.
Once the powerhouse of computer networking software, Novell has struggled to remain relevant in the Internet age. Although a web-enabled update of its core Netware product was well received two years ago, it sold primarily to existing users, and did not dent sales of Microsoft’s competing products, Windows NT and Windows 2000. Newer Novell products have been praised by critics but have not sold in large volumes.
Analysts say that the layoffs, which will leave Novell with 4,600 employees, are necessary but that the company still needs to jump- start sales of new products to revive growth.
Novell, which is based in Provo, Utah, said it expected to reduce total quarterly costs by approximately $25 million, beginning in the first fiscal quarter of 2001. The reorganizing is part of management plans to focus the company on a new initiative to deliver software programs and performance enhancements as services on the Internet, while improving business performance.
Total quarterly savings from the revamping are about $45 million, but increased spending on related Internet services initiatives will offset about $20 million of the initial quarterly savings, the company said.
“We’re reducing expenses overall, and we are also freeing up dollars to spend on key sales, marketing and development initiatives that are part of our strategic focus,” said Novell chairman Eric Schmidt.