Pink slip rumours fly at Novell

Pink slip rumours fly at Novell

Novell is expected to pink-slip up to one-quarter of its workforce as early as this week according to US reports and Novell Australia has refused to confirm or deny it will follow suit.

Novell is likely to lay off up to 1,300 of its 5,500 employees to bring expenses in line with diminishing revenue, sources say. The company will take an estimated charge of $US20 million in severance and benefits. The layoffs will come on the heels of a string of defections from upper management and amid speculation that additional executives are close to leaving.

Cliff Smith, Novell Australia's managing director, refused to confirm or deny Novell's Australian operations are likely to follow suite.

"It's speculation at this stage [in the US]," Smith told ARN. "In Australia, as you're probably aware from the Q2 and Q3 reports we released, our results were comparatively strong.

"As far as the rumours go, we're not going to comment on that sort of thing," he added.

Novell's last major layoff cost 17 per cent of its workforce their jobs in the third quarter of 1997 as the company headed into a $78 million year-end loss. Industry experts see this upcoming cutback as both inevitable and risky.

"You could look at the revenue for the last few quarters and say they need to do something," says Dan Kuznetsky, an analyst with International Data Corporation in the US. "Layoffs may cause the stock price to rise because [financial] analysts look at expenses lining up with revenue."

However, Kuznetsky believes that any benefit from such massive cutbacks could be short-lived.

"They may result in lower revenue, which will cause a spiral downward to the bottom," he says.

Novell's US officials declined to discuss the impending moves in detail, but a spokesperson did offer this comment: "We did commit to lowering our operating expenses as part of budget planning for fiscal 2001. How this is going to be done, depends completely on the budgeting process."

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