Novell To Slash 600 Jobs, Sell Celerant Consulting
The Waltham, Mass.-based software company unveiled its restructuring plans late Wednesday as the Open Source Business Conference concluded in Newton, Mass. The layoffs will reduce the annual run rate expenses by more than $110 million, according to Novell. The company expects to record a charge of $30 million to $35 million in its fiscal fourth quarter ended Oct. 31, 2005.
After his keynote speech earlier in the day at OSBC, new Novell President Ron Hovsepian told CRN that the number of layoffs was lower than anticipated and that the company would throw more resources at Linux and shed "noncore" assets, possibly Celerant. Novell, which has 5,800 employees, was expected to slash its workforce by < ahref="/sections/breakingnews/dailyarchives.jhtml?articleId=172901084">as much as 20 percent.
In a press statement released Wednesday, Novell Chairman and CEO Jack Messman didn't specify where the 600 job cuts would be made. But he indicated that Novell would leave its sales force alone and refocus its product development and consulting on growth opportunities in Linux, open source, and identity and resource management.
Formerly chief executive of Cambridge Technology Partners, which Novell acquired in 2000, Messman said the company is evaluating "noncore consulting activities" to better align its sales capabilities with its business strategy.
Novell's former base, Provo, Utah, employs roughly a third of its workforce and saw about a third of the cuts, a company spokesman said. About 20 jobs were lost in the company's Boston-area headquarters.
Novell declined to say where the remaining 380 job cuts would come from, but sources familiar with the company's plans said Novell's European operations would be hit hard, including a consolidation of its consulting offices scattered throughout Europe.
One former Novell insider said about 380 Suse Linux employees, including approximately 150 engineers, were in Nuremberg, Germany, when Novell acquired Suse. The number of engineers dwindled down to about 100 as developers left for other opportunities in 2004 and 2005. It's not clear how many Suse jobs were lost as part of the restructuring.
Novell also said its board of directors authorized the hiring of Citigroup Corporate and Investment to explore "strategic alternatives" for Celerant, Novell's consulting subsidiary. Messman also said the company previously stated that it would separate Celerant from Novell when market and other conditions were appropriate.
Solution providers said the moves will benefit channel partners and help them push Linux more aggressively. Novell's Hovsepian said the company is distributing a sales kit designed to help channel partners sell Linux more effectively.
"We were a pretty big Red Hat shop a few years ago, and we jumped ship when Novell acquired Suse because Red Hat's channel program was awful," said Paul Anderson, Paul Anderson, president of Novacoast, a Santa Barbara, Calif.-based Novell Platinum partner. "I've kept in contact with some Red Hat shops that I've known for a while, and it hasn't gotten much better for them. My sense is that Novell will pick up Red Hat's channel partners as time goes by because Novell simply has better [channel] programs."