As it turns out, it wasn't so bad; the regulators were reviewing a few periods where Novell made some complex moves, such as the Microsoft
In other and more material news, the company doesn't see eye to eye with Mr. Market on the caliber of fiscal 2007. "We believe our financial results for the quarter and the full year are very positive and show great progress," CFO Dana Russell said on the earnings call. Both non-GAAP earnings and sales came in above management guidance and Wall Street estimates.
But that wasn't good enough for the market makers, and Novell's share price remains flat since the announcement. The likely culprit is a less-than-rosy outlook on 2008, with sales about flat over this year as the company strives for a different revenue mix.
In particular, Novell wants to drive more business towards installation partners like IBM
But I think it's a really good idea. You see, the service segment delivered a 29% margin this quarter. Not bad, but software licenses and maintenance contracts brought in a staggering 90% gross margin on its sales. Sure, you'd have to adjust those figures with sales and marketing expenses, but that applies to services as well. So you can see how Novell wants to run a more profitable business mix, even if it means lower revenue. Focus on Linux platforms and identity management solutions, and let less profitable items eventually drop off the edge of the world. It's a sensible strategy that I wish Sun Microsystems
Maybe it's time to take a position while the market panics over shallow short-term issues. I think the company is on the right track. Way to go, Novell!
Microsoft is, as always, a Motley Fool Inside Value recommendation.
Fool contributor Anders Bylund holds no position in any of the companies discussed here, but he is a certified IBM AIX administrator. You can check out Anders' holdings if you like, and Foolish disclosure is always at your service.