Novell Inc. delivers infrastructure software for the Open Enterprise. Novell is a leader in enterprise-wide operating systems based on Linux and open source and provides the enterprise management services required to operate mixed IT environments. Novell helps customers minimize cost complexity and risk allowing them to focus on innovation and growth. Novell Inc. has a market cap of $1.43 billion; its shares were traded at around $4.16 with a P/E ratio of 18.9 and P/S ratio of 1.5.
Highlight of Business Operations:During the second quarter and first six months of fiscal 2009, we recorded net restructuring expenses of $7.2 million and $15.3 million, respectively, which were primarily a completion of our restructuring plan that began in the fourth quarter of fiscal 2006. That plan was related to our strategy to implement a comprehensive transformation of our business and to achieve competitive operating margins through four main initiatives: 1) improving our sales model and sales staff specialization; 2) integrating our product development approach and balancing between on and offshore development locations; 3) improving our administrative and support functions; and 4) transforming our services business to be more efficient and product focused.
Revenue from maintenance and subscriptions increased in the second quarter and first six months of fiscal 2009 compared to the prior year periods primarily due to increased revenue from Linux Platform Products, which increased $7.4 million, or 25%, over the second quarter of fiscal 2008, and $14.1 million, or 24%, over the first six months of fiscal 2008. Revenue from maintenance and subscriptions also benefited from our acquisitions of PlateSpin and Managed Objects, which contributed an additional $2.1 million and $4.3 million in the second quarter and first six months of fiscal 2009, respectively. In general, despite challenges posed by the current economic climate, maintenance and subscriptions revenue continued at relatively steady rates due primarily to consistent renewal rates with respect to existing software deployments.
Foreign currency exchange rate fluctuations, as measured by using prior period foreign currency exchange rates on non-U.S. dollar denominated revenue, negatively impacted total net revenue by $6.3 million, or 3%, and $9.0 million, or 2%, during the second quarter and first six months of fiscal 2009, respectively.
Revenue from our Workgroup segment decreased in the first six months of fiscal 2009 compared to the prior year period primarily from lower combined OES and NetWare-related revenue of $13.7 million, lower services revenue of $10.5 million and lower Collaboration product revenue of $6.3 million. Invoicing for the combined OES and NetWare-related products decreased 25% in the first six months of fiscal 2009 compared to the prior year period. Product invoicing for the Workgroup segment decreased 21% in the first six months of fiscal 2009 compared to the prior year period.
We had total deferred revenue of $659.4 million as of April 30, 2009 compared to $701.6 million and $730.1 million at April 30, 2008 and October 31, 2008, respectively. Deferred revenue represents revenue that is expected to be recognized in future periods under maintenance contracts and subscriptions that are recognized ratably over the related contract periods, typically one to three years. Deferred revenue related to our agreements with Microsoft is recognized ratably over various related service periods, which can extend up to five years. The decrease in total deferred revenue of $70.7 million compared to October 31, 2008 is primarily attributable to lower invoicing during the first six months of fiscal 2009, partially offset by the receipt of $25.0 million from Microsoft for the first payment under an August 2008 agreement with Microsoft to purchase additional SLES certificates (See the subsection entitled, Microsoft AgreementsRelated Revenue of Note B, Summary of Significant Accounting Policies in our fiscal 2008 Annual Report on Form 10-K for more details on the 2006 Microsoft agreement).
Read the The complete ReportNOVL is in the portfolios of HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Arnold Van Den Berg of Century Management.