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BOSTON (AP) -- Novell Inc. on Thursday ousted its chief executive and chief financial officers in the latest effort to reverse the software company's lackluster performance and sagging stock price.
CEO Jack Messman and CFO Joseph Tibbetts Jr. led the company, formerly based in Utah, as it shifted its focus in recent years from networking software to distributing the Linux operating system and providing related services.
Messman, 66, was replaced by Ronald Hovsepian, 45, who has been president since October. Tibbetts, 53, was replaced on an interim basis by Dana C. Russell, 44, vice president of finance and corporate controller.
"The board concluded that a management change would be the best way to accelerate the execution of our growth strategy and build value for shareholders," said Thomas G. Plaskett, a director of Novell since November 2002. He also was named non-executive chairman.
Shares of Waltham-based Novell surged more than 9 percent on the news, closing at $6.55 -- up 55 cents -- in Thursday trading on the Nasdaq Stock Market.
Analyst Drake Johnstone of Davenport & Co. in Richmond, Va. raised Novell's rating from "reduce/sell" to "neutral," citing "our belief that Mr. Hovsepian will be more effective in driving increased growth at Novell as well as improved profitability than his predecessor."
James Gilman, an analyst at Soleil-Cross Research, said investors lost respect for Messman and Tibbetts after they failed to deliver promised results.
"It just became the same old story," he said
Gilman kept Novell's rating at "hold," citing competitor Red Hat Inc.'s dominance in the Linux business among his reasons for caution.
"Red Hat enjoys a mind share and the market share that goes along with it, and (Novell executives) just have not executed well there," he said.
Novell can succeed in its Linux business, but it needs significant improvements, particularly within its sales force, Gilman said
"They need to have a sales force that is more tuned to Linux and ... able to promote it out there on the street," he said.
Last month, the company reported a $3.3 million profit in the second quarter, up from a loss $15.6 million in the same period last year. But revenue for the quarter was $278.3 million, down 6 percent from $297.1 million last year.
At the same time, the company projected third-quarter sales of $239 million to $247 million, with earnings of 3 cents per share. Analysts were expecting the company to report earnings of 4 cents per share on $282.94 million in revenue.
Messman was with the company when it went public in 1983, then left to head the Internet consultancy Cambridge Technology Partners, though he remained on the company's board. He became chief executive in 2001 when Novell acquired the consultancy.
He will remain on Novell's board until Oct. 31.
(Copyright 2006 by The Associated Press. All Rights Reserved.)
