Microsoft Expanding Linux Efforts With Novell (MSFT, NOVL)

Novell Inc. (NASDAQ: NOVL) got some decent news after Microsoft (NASDAQ: MSFT) expanded its Linux support relationship for interoperability.  If it seems that Microsoft is warming up to Linux and open source, it is at least evidence that the company realizes it has to expand its interoperability in today’s world.  Novell will receive $100 million to provide additional resources, training, and support for companies and organizations using mixed-source IT operations.

This will focus on enhanced programs from Novell to provide tools,support, training and resources for customers seeking anenterprise-class Linux platform, particularly the interoperabilitysolution between Microsoft Windows Server and SUSE Linux EnterpriseServer from Novell.  As part of the arrangement, Microsoft’s will spendup to $100 million in certificates so customers can get expandedsupport from Novell.  Microsoft and Novell will solicit customer inputand identify to organizations running mixed-source environments.

This relationship began in November 2006 as a five-year partnershipwhere Microsoft purchased $240 million of Novell certificates to sellto customers. According to this data, Novell invoiced more than $157million in certificate revenues within 18 months.  Some of the keycustomers that are said to seamlessly run both Windows Server and SUSELinux Enterprise Server include Wal-Mart Stores Inc, HSBC Holdings,Renault, Southwest Airlines Co, BMW and many other leading companiesaround the world.

Novell shares closed at $5.74 yesterday and we have not seen pre-marketindications as of yet.  As far as the overall size, Novell’s fiscalOct-2007 revenues were $932 million and Oct-2006 fiscal revenues were$967 million.  Analysts are looking for $958 million in fiscal 2008revenues and $998.8 million in 2009 revenues.

JON C. OGG
August 20, 2008