Novell axes CEO Messman, CFO to ‘spur growth’

Novell Inc.’s board of directors has ousted Chairman and Chief Executive Officer Jack Messman and Chief Financial Officer Joseph Tibbetts in a move designed to accelerate the company’s growth, Novell announced Thursday.

Ron Hovsepian, Novell’s president and chief operating officer, was made CEO in addition to his existing duties. Dana Russell, Novell’s vice president of finance, becomes interim CFO.

The changes are effective immediately. Messman, 66, will remain on Novell’s board until the end of October, the company said. Hovsepian, 45, was also made a Novell board member.

The board concluded that the management changes would be “the best way to accelerate the execution of our growth strategy and build value for shareholders,” Novell said.

In a conference call Thursday, the company shed no further light on Messman’s or Tibbett’s departure. Thomas Plaskett, a Novell director who takes Messman’s job as chairman, said only that the company is “genuinely appreciative” of their contributions. The departing executives offered no comments in Novell’s press statement.

In an interview, Hovsepian said only that Messman’s departure was a “formal separation.”

Messman became Novell chairman and chief executive when it acquired his former company in 2001.

Novell’s NetWare, once the dominant network operating system, has seen its lead erased by Microsoft Windows. Under Messman’s leadership, Novell set out on a new strategy several years ago to build a business based on the open-source Linux operating system, acquiring German vendor Suse Linux in 2003.

It has failed to make big inroads against Linux market leader Red Hat Inc., however. Cost-cutting efforts helped Novell turn a profit of US$3.1 million in its most recent financial quarter, from a loss of $15.7 million a year earlier. But revenue for the period declined, to $278 million from $297 million.

The company will continue to focus on its existing product strategy, notably Linux and Netware, identity management, data-center management and security products, Hovsepian said. “As CEO my top priority is to accelerate the speed and urgency behind our transition to Linux-based products,” he said on the conference call.

The company will step up its investment in management tools, potentially through some acquisitions, Hovsepian said in the interview. “Our enterprise Linux story is very good. … We now have to get a richer management story to help customers, so we’ll be filling our hand out there,” he said.

The company will also try to fix weak areas, by increasing the amount of maintenance revenue it generates, for example. Novell hasn’t required customers to register with Novell when they bought past versions of Suse Linux Enterprise Server through channel partners. That will change when version 10 ships, making it easier to sell follow-on services, he said.

“Over 50,000 customers worldwide are our customers. That said, we still have a lot of work to do,” Hovsepian said.

The company sees its biggest opportunities in switching customers who are on Unix today. That’s happened mostly in financial services and governments so far, but Linux is also picking up in the retail sector, he said.

He’ll also try to simplify Novell’s business, possibly by reducing the number of pricing options that it offers.

Hovsepian has risen quickly through Novell’s ranks, passing his three-year anniversary last month. Formerly with IBM Corp. for 17 years, he joined Novell as president of its North American operations and became president and chief operating officer last May. He has “the right experience, expertise and energy” Plaskett said.

The top management changes were not spurred by any “accounting issues or other improprieties,” he said. “Given today’s environment it;s important to assure you the boards’ decision was based purely on evaluation of who’s best suited to lead the company going forward,” Plaskett said.

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