Novell Inc. announced that it is speeding up the phase-out of its hardware business, resulting in an inventory write-down that will negatively affect net income.
Novell did not disclose the amount of the write-down, saying fourth quarter and year-end results will be announced next week. Company officials were in New York on Tuesday to promote several new software products."Excluding the inventory write-down, our operating results for the fourth quarter were quite satisfactory, with strong growth in the percentage of software products vs. hardware products," said Raymond J. Noorda, chairman and CEO of Novell.
Growth in sales and operating income, excluding write-downs, remained strong during the fourth quarter ended Oct. 29, he said, but the company has decided to expedite its long-term strategy phasing out most hardware products, requiring an inventory write-down.
"During 1988, more than 60 percent of sales were comprised of software products," Noorda said. "As we shift out of the hardware side of the business, we expect to see margins improve significantly."
Shipments of software products represented 65 percent of revenues during the fourth quarter, compared with 61 percent of revenues during the third quarter, 58 percent during the second quarter, and 55 percent during the first quarter.
Novell is the leading independent provider of high performance networking connectivity products. The company's NetWare operating system has become a standard for LANs, with more than 300,000 operating systems installed worldwide.