Novell layoffs part of restructuring

Despite Novell Inc.’s recent announcement that it will lay off almost one-fifth of its global workforce, the head of the company’s Canadian arm maintained that the cutbacks will have no effect on Novell Canada Ltd.’s customers.

Don Chapman, the company’s vice-president and general manager, stressed during an interview with Network World Canada that there will be no problems or issues facing the company’s Canadian customers.

“From a customer perspective, there will be no impact, (but) actually an improvement,” Chapman said. “There are two things that are going on. One is a change in the head count, with regards to market demand in some areas, especially in the delivery of services. And then the other is, you reorganize as you get into a new fiscal year. And Novell’s fiscal year ended in October and started its new fiscal year on November 1.”

Provo, Utah-based Novell announced last month that it was reducing its total workforce by 19 per cent – approximately 1,400 jobs worldwide – in order to restore profitability and to prepare for the company’s plans and consolidation of Cambridge Technology Partners, the IT services firm Novell purchased in March. Chapman said Novell Canada was impacted very minimally. Of the total number of jobs lost, “very few” were in the Canadian office, according to Chapman. While refusing to give concrete numbers, Chapman said the layoffs amount to “a lot less than five per cent” of the Canadian Novell workforce.

He added that of the people laid off from the Canadian office, more positions dealing with infrastructure were affected than those that deal with customers and partners. He also said that any reductions in staff in the U.S. will not affect Canadian customers.

“Novell is just doing a restructuring with regards to its cost model based on where we’re going in the marketplace. And you’ll see continued investments being made by Novell in the growth areas,” he said.

One long-time Canadian customer is unconcerned about the announcements made by the company. Michael Franey, director of computer operations and telecommunications services for the City of Toronto, said he has been a Novell customer for approximately 10 years. He explained that he heard about the restructuring through a briefing by his account representative, and added that he feels there will likely be no impact on him or his organization.

“I personally have no concerns. I think the organization that I work for has no concerns,” Franey said. “We had gone through a merger of seven governments into one, so I know what takes place through mergers and acquisitions. Basically, I’m very confident with the relationship. I mean, with the acquisition of Cambridge Technologies there’s bound to be some duplication of effort and services. As well as with the economic downturn, again, there’s going to be some refocusing on some core lines of businesses, but I’m not impacted.”

In a press release, Novell said it is also “writing off certain assets, and anticipates a pre-tax restructuring charge of approximately US$55 million, most of which will be taken in its fourth fiscal quarter that ended Oct. 31, 2001.”

The company anticipates that with these reductions, it will be able to save approximately US$200 million annually by the second half of its fiscal 2002. The company also anticipates that its restructuring process will occur more quickly than it had originally anticipated, and said it will be completed in the second quarter of the fiscal 2002.

Dan McLean, director of enterprise network services research at IDC Canada in Toronto, said it is too difficult to predict if the company’s actions amount to a warning of bad things to come. But, he added, the fact that the company had to lay people off was not surprising, given its plans.

“I don’t think that there’s any question that Novell is in the midst of trying to reinvent itself as a company and to refocus on, I guess, really taking a stronger turn and being more of a services company,” McLean said. “So I don’t think it’s necessarily surprising that there are layoffs that result from that kind of thinking because one of the issues is that you don’t necessarily need the same people that you’ve always had if you are looking to reorient or change your business.”

He explained that while the company is likely laying off people that are involved in its traditional business, there might be some hiring to address the new fundamental areas that Novell is looking to get into a few months down the road.

For more information, visit Novell Canada at www.novell.ca.