Following disappointing second quarter results and failure to grow its base of Linux customers as quickly as investors had hoped, the board of directors at Novell Inc. said they voted to oust former CEO Jack Messman and former CFO Joseph Tibbetts Thursday, effective immediately.
Ron Hovsepian, who most recently held the post of president and COO at Novell, was quickly named by the board to succeed Messman, who will remain on the board until the end of October. Hovsepian joined Novell three years ago as president of Novell North America after 17 years with IBM Corp. and was appointed to president and COO in October 2005. Board member Thomas Plaskett has been elected non-executive chairman of the board. Dana Russell, Novell’s current vice-president of finance and corporate controller, has been appointed interim CFO until a full-time replacement for Tibbetts has been found.
The announcement was made public before the markets opened via Webcast and teleconference on the same day that Novell announced the availability of a service pack for the latest edition of its collaboration software suite, GroupWise 7. Novell’s stock price jumped seven per cent on Thursday — a vast improvement over its 25 per cent drop earlier this month following the release of its Q2 numbers on May 31.
“The board’s decision was based purely on the evaluation of who’s best suited to lead the company going forward at this stage of the company’s development,” said Plaskett. “There are no accounting issues or other improprieties that contributed to our decision to make these management changes.”
Once a giant in the software industry with its flagship NetWare product, Novell, under Messman’s direction, more recently adopted a Linux strategy with its acquisition of Suse and Linux desktop vendor Ximian in late 2003. Since then, Novell has tried to migrate its legacy Netware customers off of the old software and onto its Linux-based offerings. Novell’s Linux strategy will continue to be at the forefront of the company’s overall direction, according to Hovsepian.
“As CEO my top priority will be to accelerate the speed and urgency behind the execution of our business strategy and the transition to our Linux-based products, identity and resource management,” he said.
But Novell, as the second largest distributor of the Linux OS in the North American market, has a long way to go to catch up with Red Hat, according to David Senf, manager of Canadian application development and infrastructure software at IDC Canada.
“Red Hat began with Linux and has only been targeting Linux as its core strategy,” said Senf. “It’s broadening that strategy with its acquisition of JBoss as it tries to move up the stack.”
While Novell has been growing rapidly in the identity and access management space, Senf added, it has failed to do the same for its Linux installed base.
Novell has been growing rapidly in the identity and access management space, but “Red Hat is growing at a faster rate than Novell is in the Linux market space,” he said.
Despite the market’s reaction to Novell customers’ slow migration to Linux, Hovsepian is betting the company’s future lies in the Linux OS.
“With Linux running more and more of the worldwide servers and being a greater presence on desktops and other areas, I believe we have a tremendous opportunity before us,” he said. “While I do not underestimate the challenges we face, I believe we have a tremendous opportunity to move forward quickly and capture opportunities we see in the market for open enterprise solutions.”