Software maker Novell Inc. announced Wednesday it has laid off about 900 employees --16 percent of its work force -- as a cost-cutting measure after several quarters of profitability problems.
The layoffs have been anticipated by analysts who have seen the network software maker struggle to compete against Microsoft Corp. and IBM Corp. Support for NetWare, the network operating system which has been the company's flagship product, will be unaffected by the layoffs, said Peter Troop, Novell's vice president of investor relations.
The Utah-based software maker said it is also writing off certain other assets, and anticipates taking a pre-tax restructuring charge of between US$40 million and $50 million in its fourth fiscal quarter, ending October 31, 2000.
The personnel reduction leaves Novell with 4,600 employees and about an extra $45 million each quarter, said Troop. About $20 million of that savings will be spent on developing Novell's Internet services business, he said.
"Change is implicit in the nature of this business. Companies that succeed are companies that change," said Troop. Novell "is going to a new business model ... one that requires different things of us."
Novell reorganized its internal operations in late May into four divisions: directory, management, Internet content and services. The layoffs reflect that reorganization and will help bring personnel levels in line with the new structure, said Troop. He said he didn't know specifically how many people from each division would lose their jobs.
Novell's new plan places greater emphasis on customer services, support and consulting, the fastest growing areas of the company's business, he said. These areas account for 18 percent of Novell's revenue, and the company hopes that these areas will make up 30 percent of Novell's revenue over the next two years, said Troop.
In early Wednesday trading, Novell shares hovered around $11, slightly below Tuesday's closing price of $11.06.
Novell, in Provo, Utah, can be reached at +1-801-222-6000 or via the Internet at http://www.novell.com/.