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Open Source Blog
Dear Novell, please stop messing about with your Linux revenue figures. Thanks.
December 06, 2006
Novell announced its financial results for the fourth quarter of 2006 last night, including “$13 million of revenue from Linux Platform Products, up 32 percent year-over-year,” according to its official statement.
That sounds like a pretty healthy performance until you notice that in the fourth quarter of 2005 Novell reported “$15 million of revenue from other Linux products and services”.
How can $13m be 32% more than $15m? What is the difference between “Linux platform products” and “Linux products and services”? I don’t know, but it is high time Novell stopped moving the goal posts and reported consistent figures for its Linux business.
Since it completed the acquisition of SUSE Linux in early 2004, Novell has reported the following Linux-related revenue:
3Q04
$12m "SUSE Linux business"
4Q04
$12m "SUSE Linux business"
1Q05
$15m "SUSE Linux business"
(including $7m "SUSE Linux Enterprise Server")
2Q05
$8m "SUSE Linux Enterprise Server"
3Q05
$44m “Linux-related product revenue”
(Including $31m Open Enterprise Server and $8m "SUSE Linux Enterprise Server"
4Q05
$61m “Linux platform revenue”
(including $46m Open Enterprise Server and $15m "other Linux product and services")
1Q06
$56m “Open Platform Solutions”
(including $43m Open Enterprise Server and $13m "Linux Platform Products and other open source products"
2Q06
$57m “Open Platform Solutions”
(including $38m Open Enterprise Server and $10m “Linux Platform Products”
3Q06
$12m “Linux Platform Products”
4Q06
$13m “Linux Platform Products”
In March Novell’s then COO (now CEO) Ron Hovsepian, explained that the apparently flat Linux revenue figure was misleading, as Novell was busy focusing attention away from SUSE’s retail business to the enterprise.
Also at the BrainShare conference, the company’s then-CEO, Jack Messman, said that two-thirds of its OES users had deployed on Linux (with the other third on NetWare), which made the combined Linux revenue figures a lot healthier.
While that explained why Novell started reporting “Open Platform Solutions” from the first quarter of this year, what are we to make of the fact that Novell has abandoned that categorization? Shrinking OES revenue?
It would appear so, in the third quarter Novell reported that “combined revenue from Open Enterprise Server and NetWare-related products declined 19% from the year ago period” and in the fourth quarter it was a similar story: “combined revenue from Open Enterprise Server and NetWare-related products declined 25 percent from the year ago period.”
The assumption is that the company has got something to hide, and this is an example of how Novell’s moving of the goal posts sometimes just serves to highlight its problems.
The second version of OES, due sometime next year, will only run NetWare in virtual environments, and should therefore make it easier for the company to deliver a single figure for its Linux business.
Until then the company needs to stick to a way of categorizing its Linux revenue or else explain how $13m can be 32% higher than $15m.
Comments
I noted that they said total 2006 fiscal year revenue is about 967 million but if you sum up 1stq. to 4th q. it comes up to 1.04B. What figure are they using to come up with this. Any idea? I am an individual stock holder and I am trying to understand which Q. they said the decrease from in comparison to 2005 fy. Thanks. Any thoughs? jeomer
Hmm, I don't know about that, but Novell have got back to me on the Linux revenue. I'll update in more detail when I get a chance.
One figure is for products & services, the other is for products. If $13M is a 32% increase over the 2005q4 product number, the 2005q4 product number is $9.85M, which leaves $5.15M in services revenue out of the overall linux business number $15M for 2005q4.
Peter, while that would be a good explanation, it's not quite correct, as Novell has explained. I'll have a new post up soon with their explanation and some further comments.
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