Novell To Lay Off 600 To Cut Costs

The Waltham, Mass., software company, which unveiled its restructuring plans after the conclusion of last week's Open Source Business Conference, said the layoffs will reduce annual run rate expenses by more than $110 million. The company expects to record a charge of $30 million to $35 million in its fiscal fourth quarter ended Oct. 31, 2005.

New Novell President and COO Ron Hovsepian told CRN the company would reassign employees, throw more resources at Linux and shed "noncore" assets.

In a press statement, Novell Chairman and CEO Jack Messman indicated Novell would leave its sales force intact and refocus its product development and consulting on opportunities in Linux, open source, and identity and resource management.

Novell's former base in Provo, Utah, saw about a third of the cuts. About 20 jobs were lost in the Waltham office.

Novell declined to say where the remaining cuts would be made, but informed sources said its European operations would be hit hard.

Novell also said it hired Citigroup Corporate and Investment to explore "strategic alternatives" for Novell's Celerant subsidiary. Messman said the company previously stated it would separate Celerant from Novell when market conditions were appropriate.

Solution providers said the moves will benefit channel partners and help them push Linux more aggressively.

"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, president of Novacoast, a Novell Platinum partner in Santa Barbara, Calif. "My sense is that Novell will pick up Red Hat's channel partners because Novell simply has better [channel] programs."