Novell Ousts CEO, CFO

Novell (Nasdaq: NOVL) has fired its CEO and CFO after several quarters of anemic growth during which its main competitor, Red Hat (NYSE: RHT), has grown significantly.

Novell's Board of Directors has replaced CEO Jack Messman, who has been with the company for decades, with chief operating officer and president Ron Hovsepian, an IBM (NYSE: IBM) alumnus who joined Novell in 2003.

There has not been a replacement announced for the CFO, Joseph Tibbetts. Dana Russell, Novell's current vice president of finance and corporate controller, has been appointed interim CFO until a permanent appointment is made.

"In recent months, we have adopted a comprehensive strategy, strengthened our portfolio through both acquisitions and organic growth, and divested the non-core Celerant business," Hovsepian said in a statement. "Although we still have much to do, these steps have positioned us to take full advantage of recent trends towards a mixed source computing environment based on open source and open standards."

Too Little Too Late?

The general consensus on Wall Street and in the industry is that the replacements are long overdue. Novell has been on a sharp decline for the last several years -- occasionally slowed by various acquisitions the company has made and, recently, by a US$500 million-plus antitrust settlement from Microsoft (Nasdaq: MSFT), which gave Novell's balance sheet a nice boost.

Unfortunately, Novell has frittered away all of its opportunities over the years, Laura DiDio, a senior analyst with the Yankee Group, told TechNewsWorld. For example, its acquisition of Suse's Linux products a few years ago was widely viewed as a smart move. Since then, though, Novell has significantly cut its engineering resources.

Another acquisition, that of independent Web services provider Silverstream, was initially well regarded, DiDio said. "Do you hear anything about them today? No. All of the management has left the building."

Meanwhile, Red Hat has surged ahead in sales , in profitability and in growth. "It outsells Novell's products by a ten to one margin," she said.

From Here

Novell revealed little more of its forward strategy when it announced its executive realignment.

The company intends to maintain a focus on its Linux-based, enterprise-wide solutions, as well as its identity and resource management products. "We have innovative technology, a strong roster of customers and business partners, and an extremely talented group of employees," Hovsepian said. "I look forward to continuing to work closely with our business partners and customers."

To be sure, there is no shortage of advice being offered -- both privately and publicly -- as the company seeks to right itself. DiDio, for instance, suggested tying management performance and other bonus packages to performance.

Novell also would do well to rebuild its reseller channel, she added.

Above all, the company needs to hang onto what installed base it has left -- which has remained fiercely loyal, DiDio said. "It is amazing in a way; Novell scores so well on the reliability of its products, but no one is willing to use them."