Novell announced yesterday that it will concentrate its business on key growth opportunities in the Linux and Open Source and Identity and Resource Management markets, resulting in a restructuring of the business that will reduce annual run rate expenses by more than $110 million.
Novell anticipates that it will record a restructuring charge in the range of $30-35 million in the fourth fiscal quarter ended October 31, 2005.
The full effect of the cost reductions is expected to be realised in the first fiscal quarter ending January 31, 2006. When completed in the first fiscal quarter 2006, the cost restructuring is expected to result in approximately 600 job losses, more than 10% of Novell’s worldwide workforce.
Jack Messman, Novell’s chairman and CEO, said, “While it is a difficult decision to eliminate positions in our talented and dedicated workforce, this move is necessary to ensure that our costs are more closely aligned with our business strategy.”
Novell says that as a result of the restructuring, product development and consulting resources will now be more focused on its growth businesses, Linux and Identity. Novell also expects to continue to evaluate non-core consulting activities.
Novell also announced yesterday that its board of directors has authorised management and its financial advisor, Citigroup Corporate and Investment Banking, to explore strategic alternatives for Celerant, Novell’s consulting subsidiary. The company has previously stated that it intends to separate Celerant from Novell when market conditions are appropriate.