It does look that there are huge challenges ahead of Novell, if one goes by the Q2 numbers. On revenues of $239 million, the company just had earnings of $110,000. More importantly, the revenue mix and its dependence on Microsoft seem to indicate huge challenges. Here are the details:
Much of the revenue growth in Q2 has come from SUSE Linux and that too from Microsoft. It received close to 40% of the $240 million five year contract with Microsoft. It does seem that Novell is front- loading the Microsoft deal.
Microsoft is essentially Novell’s largest reseller.
The non Linux business hardly showed any growth, in fact their system management business declined.
Microsoft despite the alliance with Novell is not likely to promote Linux. It is essentially using this deal to further its own agenda — whatever that is.
So, if Microsoft does not sell more SUSE Linux certificates and if the new GPL licensing comes about in the next quarter or so, Novell will really feel the pressure.
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