By Dave Kearns
If it sometimes seems like I blow hot and cold about the prospects for Novell's future it's only because the company itself seems to lack a realistic plan for the future.
Two weeks ago, the press was full of speculation about Novell's plan to lay off 20% of its workforce before the end of the quarter (Oct. 31). That date came and went with no noticeable dent in the company's payroll.
While it might seem prudent to blame the press for rumor-mongering, it this case the rumors were so wide-spread that they almost had to have come (in some form) from inside the company. When the company then refused to deny the rumors, the prognosticators took it as a confirmation. But the prognosticators had been primed to believe the rumor because a number of analysts and stockholders had urged the NetWare vendor to slim down its employee roster.
As we went to press, Novell was announcing a "restructuring" which would see the elimination of 600 or so employees by the end of January 2006. The company also announced that it would seek to divest itself of its Celerant consulting subsidiary. It wasn't clear from the announcement if the 600 employee reduction would come from the Celerant divestiture or be in addition to it.
Last week, Novell seemed to be moving towards another recommendation of its vocal shareholders when the company appointed Ron Hovsepian president and COO. The last president and COO of the company, Stewart Nelson, had been promoted to take some of the load off the shoulders of then CEO Eric Schmidt at a time when major investors thought Schmidt had too many things on his plate. Earlier this year some investors thought current CEO Jack Messman needed help (that's a euphemism: they said he needed to go!) getting out the message of Linux, open source and identity services as the new mantra for the old-line networking company.
It does look like it is the same person who engineered Nelson's move to the president/COO position also engineered Hovsepian most recent promotion. Unfortunately, that person is Messman.
Hovsepian came to Novell in June 2003 as president of North America, essentially the chief salesman for the U.S. and Canada. During the two years in that position, he presided over a rapid decline in sales for the region (see Novell's fiscal year 2003 revenue numbers , which show a decline of almost 17% in new license revenue). As a reward, last May he was promoted to executive vice president and president, global field operations (i.e., he was put in charge of worldwide sales). Since then worldwide sales have been disappointing, at best (see Novell's 2005 third quarter results, which show a year-over-year decline of almost 20% in new license revenue). So for this he's not only left in charge of all sales, but also given day-to-day responsibility for product development and marketing?
There are many who say that Stewart Nelson's major job was to ease Schmidt out of the Novell executive offices. Once that was accomplished, Stewart himself was shown the door. There are those who say Hovsepian was promoted solely to announce the layoffs that are expected by year-end. Messman doesn't like to be the bearer of bad news.
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Dave Kearns is a writer and consultant in Silicon Valley. He's written a number of books including the (sadly) now out of print "Peter Norton's Complete Guide to Networks." His musings can be found here.