SALT LAKE CITY — Networking software company Novell said Thursday it will cut 1,400 jobs — about 19 percent of its work force — in an effort to save money in a weak market.
The company expects the cuts to be completed by April 2002.
The cuts came a day after Geneva Steel announced it would temporarily shut down its Utah County plant and lay off about 950 of the company’s 1,200 workers.
Gov. Mike Leavitt said Thursday the Novell announcement further worsened the state’s slumping economy. The state budget deficit is likely to exceed the $177 million shortfall announced previously.
Novell didn’t specify which positions would be eliminated. There are about 2,000 Novell employees in Utah. The company also has a presence in the San Jose and San Francisco areas of Northern California.
“It’s a global action. We’re not cutting out any particular group,” Novell spokesman Bruce Lowry said. The blow may be lighter in Utah.
Lowry said 6 percent of Novell employees in the state likely will lose their jobs.
When it’s all done, Novell expects to have 6,000 employees worldwide and save $200 million annually with the cutbacks.
One analyst said Novell, facing stiff competition from companies such as IBM and Sun Microsystems, hasn’t done a good enough job of marketing its products.
“I thought (Novell) had a leg up on its competition a year, 18 months ago,” said Drake Johnstone, technology analyst with Davenport and Company. That’s not the case anymore, he said.
Novell will release its fourth-quarter earnings Nov. 29. Based on preliminary numbers, the company expects revenue of $306 million and earnings of 1 cent per share. The quarter ended Oct. 31.
Novell says it’s dealing with an overall decline in the information technology market, and in particular an oversupply of IT consulting services.
“It’s a tough market. We’re not the only ones who’ve been forced to do this,” Lowry said.
Johnstone agreed that many companies are cutting back their spending on software, making business tough for Novell and other technology companies.
Novell also is in the process of folding Cambridge Technology Partners, a consulting firm, into its operation. It bought Cambridge in July for $214 million.
On the Net:
Novell site: http://www.novell.com