Network software vendor Novell has reported a drop in turnover and profit for its first quarter, but UK executives said the restructuring of its channel programme is going better than expected.
The company reported a profit of $3.2m on turnover of $245m for the period ended 31 January. However, the figure excludes an $11m charge for reducing inventory. Including the charge, Novell saw a $7.8m loss. During the same quarter in 2000, it reported $44.8m profit on $316m turnover.
Last year, Novell stepped up its efforts to work with the channel with the launch of its PartnerNet 2001 programme, which offered a services-based model for software delivery.
"We are in a transition phase and are moving into net services and the provision of products to help companies move into ebusiness," said Andy Baldwin, marketing director at Novell UK.
He explained that PartnerNet has been very successful so far, with 900 resellers signed up already, exceeding original targets of 800 enrolled by March. Novell is currently signing 20 resellers a month, Baldwin claimed.
"Novell realised it needed help from resellers because customers were migrating away," said Eddy Alejos, technical director at reseller Dynax, a PartnerNet programme member. "It has struggled to get its message across and that is why it has turned to resellers."
Novell's traditional packaged software licence sales dropped by 62 per cent year on year, comprising 18 per cent of its total turnover.
"Novell's financial results are not that much of a surprise because [NetWare] sales have slowed with significant competition from Windows NT," said Alejos.
Eric Schmidt, Novell's chief executive, said the $11m charge was related to how Novell recognised sales. From now on, the company will record a sale after it is shipped from channel partners by using a sell-through model.
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