Novell Delays Reporting its Fiscal Q4, Year-End Financials

Published: December 11, 2007

by Timothy Prickett Morgan

Commercial Linux distributor and public company Novell last week canceled its conference call with Wall Street and industry analysts to go over its fourth quarter and full-year 2007 financial results.

Novell ends its fiscal year on October 31. According to a statement put out by Novell last week, the U.S. Securities and Exchange Commission sent Novell a letter on August 7 asking the company to clarify something in the 10-K form for the fiscal 2006 year ended October 2006 and the 10-Q form for the second quarter of fiscal 2007 ended April 2007. Novell says that it responded to whatever concerns the SEC had on September 20 and received a second letter regarding the matter on October 18, this time limited to "certain accounting matters." Novell responded to this letter on November 7 and said it is awaiting a response from the SEC before closing out fiscal 2007.

"We are confident of our accounting and are working diligently with the SEC to respond to their inquiries," said Dana Russell, Novell's chief financial officer, said in a statement. "In an abundance of caution, we have chosen to postpone our earnings release. We look forward to completing our dialogue with the SEC."

Novell said it will release its Q4 and full-year 2007 financials after the SEC's review is completed, and while it was not sure when thus would be, the company said it expected to file its 10-K annual report with the SEC by its December 31 due date.

Novell has been announcing preliminary financial results each quarter since it put out results for the third quarter of 2006 back in early September 2006. At the time, news coverage of the backdating of stock options grants was just breaking all over the IT industry, and the company's audit committee voluntarily decided to review the past stock option grants at the company to see if anything might be amiss; after that initial review, the company hired lawyers to conduct a more formal review in conjunction with the audit committee.

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