Viewpoint: PR puts a Novell slant on disaster
All news is good news to a spin doctor ? even a catastrophe on the scale of the Titanic, argues Bobby Pickering
Like political parties, big companies often have a great need for that blackest of arts, spin doctoring. Even when it?s in the deepest of holes, a company can still manage to persuade some people that things are rosy and that the captains on the deck are steering the ship towards greater success.
Don?t get me wrong. I?m not saying that to rise to great heights in the noble profession of public relations you need to be a congenital liar, capable of saying anything untrue in the service of your paymasters. Many PR people I know would never think of being party to an out-and-out lie. But even if they would not allow themselves to cross the border into the Kingdom of Deceit, they?d quite happily holiday in the lands of Evasion and Obstruction.
If I were running a PR firm and hiring prospective employees, I?d give them all the task of writing a press release for the company that owned the Titanic on the day she went down. I?d give anyone a job who headed their report with something along the lines of ?Shipping firm attacks Icelandic government for lack of policy on iceberg control?. I?d also hire them if they began with the sentence: ?Specialised emergency procedure training for the crew of the Titanic has resulted in the saving of 25 per cent of the people on board ? a figure that compares extremely favourably with the 100 per cent loss of life on the Hindenburg.? I?ve known cases when things were going completely pear-shaped, though the PR operatives insisted that everything was just peachy! I was reminded of this a few weeks ago when Novell released its results for the three months to 31 January 1997, the first quarter of financial year.
The press release was a humdinger. It stated that revenue was $375 million and net income $51 million, and acknowledged that it was down on the previous year?s Q1, when sales were $438 million and net income was $64 million.
But the release tried to spin these figures by saying there had been some market weakness in Europe and Japan, and that the figures from a year earlier included $61 million from discontinued or sold product lines. What it wanted us to write was that sales for the core products were holding up, or had bottomed out despite difficult trading conditions.
A different picture emerges from Novell?s 1996 financial report. What we hadn?t been told is that Q1 revenues in the two previous years were $493 million and $488 million respectively and net income was $81 million and $94 million. In other words, Novell?s sales for Q1 1997 were down 20 per cent on those in 1994, and net income is about half of what it was.
Look at the situation another way: in the eight quarters of 1994 and 1995, Novell?s revenues were consistently in the $480 million to $537 million range. But in the last four quarters, that range has fallen to between $188 million and $383 million. So by no stretch of the imagination are we talking upward curves here. Novell is not the sales powerhouse it used to be.
By the way, that appalling $188 million figure was recorded in Q2 last year, so expect to find Novell?s spin doctors talking up this year?s Q2 figures in a few months? time. They?re sure to be dramatically better than last year ? they couldn?t possibly be worse. Novell?s PR operatives will try to convince us that those results will be a sign that it has turned the corner. But dealers and distributors who have built their businesses partly on the back of the success of Novell should think about the bigger picture when assessing whether the Red Box Channel will ever again perform quite as peachily as it used to.
Lest you think I?ve got it in for Novell or its PR operatives, I haven?t. I don?t like kicking a company when it?s down, and after the humiliation of a disastrous acquisition programme, inventory write-offs in the channel, and its inability to find a permanent CEO, Novell doesn?t need kicking from outside.
And the misery may not be behind it. Things could get even worse, now that Microsoft has effectively announced a death sentence on Intranetware by decreeing that the network operating system will be absorbed into future Active Platform versions of NT. That?s the writing on the wall for Novell. Novell?s only hope, as far as I can see, is to take one final gamble with the $1 billion in cash and short-term investments that it?s got up its sleeve. Blow the lot on a merger with Netscape, I say. That would be good news for the channel, and would create an intranet powerhouse to counterbalance Microsoft?s ambitions to control the internet. Does anyone have any other ideas?