First, some background: The VAR Guy typically doesn't blog about financial results. He's not a financial analyst. He doesn't own NOVL stock. So why blog about Novell financials? Novell is one of the key companies that will make-or-break open source's success in the IT channel. And the financial results provide important clues about potential channel directions.
Let's end the babbling back-story and cut to the chase. Here are four key facts from Novell's financials:
1. Top-line Revenue: Novell's overall quarterly revenues were $245 million, flat compared to last year's corresponding quarter but $5 million below Wall Street's expectations, according to Reuters.
The VAR Guy's Spin: Bummer. But our resident blogger isn't so concerned about Novell's top-line revenues. Rather, he's preoccupied with SUSE Linux revenue growth.
2. SUSE Linux Revenue: According to Novell's press release, the company "reported $36 million of product revenue from Open Platform Solutions, of which $33 million was from Linux Platform Products, up 33% compared to the same period last year."
The VAR Guy's Spin: Mixed reaction. Thirty-three percent growth is impressive in a horrendous economy.
But consider this: Novell says it generated $120 million for the year from Linux Platform Products. That's not much money within the overall IT industry, and it speaks to a broader industry problem: Open source companies are still struggling to monetize their code.
3. Identity and Security Management: Here, Novell says revenue was $37 million, of which Identity and Access Management was $35 million, up 11% compared to the same period last year.
The VAR Guy's Spin: This is the area where Novell and The VAR Guy don't really see eye to eye. Novell has articulated how it wants to offer customers the most secure, reliable platforms from desktops to data centers.
But within that rhetoric, it's still difficult to see how Novell's SUSE Linux and security offerings fit together, enhance one another, or drive up-selling opportunities between each other.
When was the last time you heard about a SUSE Linux solution provider that also thrived with Novell's indentity and security management solutions? The VAR Guy would like to see -- and hear -- far more about customers that are using SUSE Linux and Novell's identity/security management offerings as a complete enterprise solution.
4. Partner Strategy: Novell in recent months has announced a new channel chief and also evangelized its growing ISV (independent software vendor) program. But the company's financial release only mentioned "expanding partnerships" in passing.
The VAR Guy's Spin: It's still a bit too early for Novell to disclose how its new channel chief is performing. But over the next 2 quarters, it will be critical for Novell to describe ISV and channel partner progress in financial results.
The Bottom Line: The business that matters most to Novell's future -- SUSE Linux -- continues to grow. And the Microsoft relationship, however controvercial in the open source community, has restored Novell's credibility with quite a few CIOs, The VAR Guy believes.
In recent months, Novell has successfully articulated its strong relationships with SAP and Microsoft. But the company needs to build -- and evangelize -- similarly strong relationships with open source application leaders like MySQL, SugarCRM, and so on. Sure, Novell works with a range of open source ISVs. But that work needs to accelerate.
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