March 21, 2001, 1:06 PM — It has been a rough ride of late for Novell Inc. and its CEO, Eric Schmidt. Last September, the networking software and services vendor laid off 16% of its workforce after seeing a sharp decline in revenue and profits. Since then, it has reported losses in its past two fiscal quarters, including a $13.3 million operating deficit in the quarter ended Jan. 31.
In a bid to reposition itself, Novell last week announced a deal to acquire Cambridge Technology Partners Inc., a Cambridge, Mass.-based IT services and consulting firm that also has been beset by losses and layoffs. If the acquisition goes through as planned, Cambridge Technology CEO Jack Messman is due to take over Schmidt's position at Novell.
Novell said Schmidt will become its chairman and chief strategist after the deal is completed. At Novell's BrainShare 2001 user conference here yesterday, Schmidt talked with Computerworld about the planned acquisition and the future of Novell.
Q: Both Novell and Cambridge Technology Partners have had some rough financial quarters recently. Now that you're merging, what's going to make things any different for you?
A: I'm not sure I agree about the rough quarters. Novell's last quarter was break-even because of the continued PC industry slowdown. Also, [the current] quarter probably will be break-even and [our] revenue will probably return to normal levels subsequently. Aside from NetWare, our other software lines have grown between 20% and 40% yearly. On the Cambridge Technology Partners side, my understanding is they have not been profitable because of the dot-com collapse.
Q: Are you going to redefine Novell as a services company?
A: We are not redefining ourselves as a services company. We're a product company with a solutions arm attached.
Q: Will there be the temptation for Cambridge Technology Partners to sell only Novell products?
A: If you think about what they sell, they sell e-business solutions. You call up and say you want a customer relationship management solution, so they recommend [software from] Siebel Systems. It's hard to imagine that would alter too much. It's not like they would recommend NetWare vs. Windows. My sense is that the technology component we will offer will not change the fundamental way they operate.
Q: Do you fear that Novell itself could be acquired by another company?