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Novell Planning Layoffs?

Jun 09, 2005, 17:30 (17 Talkback[s])
(Other stories by Brian Proffitt)

By Brian Proffitt
Managing Editor

Hard on the heels of a multi-million dollar second quarter loss, Novell may be planning some significant staff cutbacks, likely in its European offices.

It is not clear whether the SUSE Linux division, located in Nürnberg, Germany, will be the sole target for the layoffs. Sources close to Novell employees in Europe have indicated that non-SUSE divisions in Europe have been asked to cut back, as well.

One Novell manager in Europe was apparently asked to reduce staff by 25 percent. It is not known if this percentage figure is universal across every department.

The exact timing for the layoffs is also not known but may be at the end of this month, according to a Novell employee.

These layoffs, if they do occur, would be a natural defense against Novell's 2Q loss of US$16 million, which the Waltham, Massachusetts-based company announced May 26. Novell's report identified declining sales of their older Netware software business coupled with just a six percent rise in sales on the Linux side of the business as a significant contributor to their loss. Linux sales figures actually rose six percent, not fell 25 percent. This was corrected based on information from Novell. My apologies for the error -BKP

Specifically, European sales figures were specifically targeted as a problem, which lends credence that this move is not just targeting the SUSE Linux division. The company's positive public stance on Linux as its future salvation is another indicator.

In his conference call announcing the 2Q results, Novell CEO Jack Messman was still very positive on Linux, citing recent sales to the US Department of Health and Human Services and several Fortune 500 companies, including Circuit City and Toronto-Dominion Bank in Canada.

Novell has made it well known that their future depends on the success of their Linux sales, and that this time of transition from one business to another is going to be the roughest part of their road ahead.

But while Novell seems to be making cost-cutting measures across the board and not just targeting SUSE, it is not clear how SUSE Linux employees and management are enjoying life under the Novell banner.

Recent departures from Novell include former SUSE Linux head Richard Seibt, vice chairman Chris Stone, and chief technology officer Alan Nugent. Many SUSE employees' stock options from the Novell purchase have recently become vested, giving outside observers another potential indicator on overall employee satisfaction.

When contacted for comment, Novell's Director of Press Relations Bruce Lowry said, "Novell does not comment on any rumors or speculation that's out there."

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