Novell Announces Restructuring to More Closely Align Expenses with Core Business Strategy

Novell, Inc. (NASDAQ: NOVL) today announced it will concentrate its business on key growth opportunities in the Linux and Open Source and Identity and Resource Management markets, resulting in a restructuring of the business that will reduce annual run rate expenses by more than $110 million. Novell anticipates that it will record a restructuring charge in the range of $30-35 million in the fourth fiscal quarter ended Oct. 31, 2005. The full effect of the cost reductions is expected to be realized in the first fiscal quarter ending Jan. 31, 2006. When completed in the first fiscal quarter 2006, the cost restructuring is expected to result in a total headcount reduction of approximately 600 positions, more than 10% of Novell’s worldwide workforce.

Jack Messman, Novell’s chairman and chief executive officer, said, “This cost restructuring initiative is part of the comprehensive transformation of Novell’s business that the management team has been designing and implementing over the past year. While it is a difficult decision to eliminate positions in our talented and dedicated workforce, this move is necessary to ensure that our costs are more closely aligned with our business strategy. This is a decisive, yet disciplined, cost reduction action that balances the need to be fiscally prudent with the need to continually seek growth opportunities and generate long-term profitability in a highly competitive marketplace.” As a result of the restructuring, product development and consulting resources are now more focused on the company’s growth businesses, Linux and Identity. Novell also expects to continue to evaluate non-core consulting activities. The company maintains its commitment to its sales resources, while it continues to align sales skills with its business strategy.

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