Novell to lay off 600 as part of bid to save $110m yearly

Linux software company Novell Inc. of Waltham confirmed yesterday that it is laying off about 600 workers, or 10 percent of the company's worldwide workforce of 5,800. The layoffs, long rumored within the software industry, are part of a restructuring plan that aims to cut Novell's annual operating expenses by about $110 million.

The company has been under severe criticism from investors for its failure to cash in on the growing popularity of the Linux operating system. Novell also said it's considering a plan to sell or spin off its Celerant technology consulting business. The company will take a charge of $30 million to $35 million for its fourth quarter, which ended Monday.

Novell spokesman Bruce Lowry said that fewer than 30 workers at the company's Waltham offices would be affected. The biggest concentration of Novell workers, about one-third of the total, are based in Utah, where the company was founded. About 200 Utah workers would be hit by the layoffs, with other job losses to come from Novell facilities around the world.

Lowry said Novell has retained investment bankers from Citigroup to examine the company's options for disposing of Celerant. He said the consulting business is profitable, and generates about $160 million in annual revenue for Novell.

But Celerant's business isn't a good fit with Novell's campaign to become a leader in Linux software.

Once the world's leading maker of computer networking software, Novell stumbled badly in the 1990s, after rival Microsoft Corp. added networking features to its Windows software. In 2001, Novell chief executive Jack Messman launched a turnaround plan based on migrating Novell's products to run on top of Linux. In 2003, Novell acquired SUSE AG of Germany, the world's second-largest Linux distributor.

But SUSE's share of the Linux market has steadily declined since the acquisition, even though overall Linux demand has been rising.

The layoff disclosure follows Novell's appointment Tuesday of Ron Hovsepian to the previously unfilled post of president and chief operating officer.

In trading on the Nasdaq Stock Market, Novell shares were unchanged, closing at $7.47. The layoffs were disclosed after the close of trading.

Hiawatha Bray can be reached at bray@globe.com.