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Novell earnings preview

NOVL2 120408

Novell, Inc. (NOVL), a provider of open source software for businesses, is scheduled to report financial results for its fourth quarter and fiscal year 2008 after the markets close on Thursday.

Analysts polled by First Call / Thomson Financial expect the company to earn $0.06 per share on revenue of $249.78 million for the fourth quarter.

The company had reported forecast-beating results for the third quarter, and analysts are expecting the company to repeat it this time too.

While reporting third quarter results in August, the company said it continued to expect net revenues for fiscal year 2008 to be between $940 million and $970 million. At that time, Novell raised non-GAAP operating margin guidance for fiscal year 2008 to between 8% and 10% from its prior guidance of 7% to 9%. Analysts will be comparing these figures with those in the company's actual results.

The company's outlook for the fiscal year 2009 will also be keenly watched to see the possible impact of the ongoing economic crisis on its business in near and long term.

Additionally, analysts will look for further updates on the company's proposed acquisition of Managed Objects as well as its share repurchase activities.

In October, Novell agreed to buy the business service management leader Managed Objects for an undisclosed sum. The deal is expected to close during Novell's first fiscal quarter. The acquisition will extend Novell's portfolio of data center solutions by adding tools to provide a unified view of all information and workloads.

Competitor Red Hat Inc. (RHT) is expected to release third quarter financial results later this month. Analysts currently expect Red Hat to earn $0.17 per share on revenue of $167.93 million for the third quarter.

In terms of stock performance, Novell shares have lost 41.21% in the last 12 months during which Red Hat shares have lost 47.78%. Novell shares trade at 13.66 times estimated forward earnings, compared to Red Hat's 19.30 times. Novell shares are currently trading at $3.81, down 27 cents or 6.62%.

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