Investors target Novell board as shares slump

Network software supplier?s CEO Eric Schmidt faces calls to sack directors as prices drop 22 per cent after profit warning

Novell?s recently installed CEO, Eric Schmidt, is facing calls from investors to fire his board of directors after the ailing network software supplier?s share price plummeted 22 per cent following a profit warning for Q2 results.

Wall Street had been expecting Novell to post second quarter sales of over $375 million, but the company last week issued a surprise warning that it expected to post revenue of between $300 million and $335 million for the quarter.

While a small profit was still on the cards, investors reacted badly to the warning and sent Novell?s share price crashing.

The revenue shortfall was blamed on sales of packaged software through third-party channels, an area of its operations that Novell has been accused of neglecting in recent years.

The company said it intended to review the product mix and inventory in its distribution channel in a bid to increase sales to small and medium-sized customers.

In a statement, Schmidt said: ?We will make the changes necessary to better manage and control Novell?s business, including setting appropriate levels for operating expenses and product inventories in the distribution channel. I intend to make certain that Novell?s resources and priorities are tuned to fully revitalise this company.?

But while Schmidt escaped criticism from investors, other members of the Novell board were picked as targets for the axe, most notably chairman John Young and president Joe Marengi, under whose joint stewardship the company has been run for the past six months.

One investor said it was time to replace the board of directors with a fresh team. ?Current board members are incompetent at best, perfidious at worst,? he claimed. ?Who do I suggest? Hell, at this point I think Snow White and the Seven Dwarfs would do a great job.?