Microsoft Paid Novell $356 Million in '07

Anonymous writes "At the end of this piece at Channelweb.com, it's reported that Microsoft paid Novell $355.6 million last year as part of their 'interoperability' deal. It's no small wonder, then, that Novell executives are saying the deal has been a huge success so far."

NASDAQ:NOVL Total Revenue

[wombatmobile]

It'd be interesting to see if the money they got from their customers in '07 equals or exceeds that number.

Novell, Inc. ( NASDAQ:NOVL ) reported total revenue of $932.5 million dollars for the year to October 2007.

http://finance.google.com/finance?fstype=ii&q=NOVL/ [google.com]

Re:"Future Periods"?

[slashchuck]

Since it does not represent current year income, the income will be allocated over the number of years represented. Expenditures such as bonuses and other compensation, which may or may not be monetary, are never tied to specific income items. They could be recorded or buried as ordinary expenditures at any time.

Re:Can someone explain this wallstreet-ese

[bgat]

There are many ways of accounting for income. Most individuals use "cash" accounting, which among other things means you pay taxes on your income in real-time, as you receive it. In contrast, many businesses use "accrual" accounting which is slightly more complicated but in summary gives them more flexibility on when to pay taxes on monies received--- and also prevents them from using one-off events to sway their tax burden unfairly. Standard stuff for corporations, nothing nefarious here.

In layman's terms, all Novell is saying is that "We received this huge influx of cash all at once, but the money doesn't represent income in the traditional sense. Thus, to prevent us using this number to misrepresent our actual earnings, we have to spread it out over several years."

Re:Don't trust them

[jafoc]

after all they haven't done anything against Linux and the FOSS community yet

That is not true.

For example, their active support for Microsoft's attack on the ODF standard can IMO only be seen as an aggression against the FOSS community.

Re:Don't trust them

[Anonymous Coward]

Uh... Novell also promised to protect their customers and change any infringing code.

But guess what? "Changing infringing code" only works for copyrighted code, not code infringing a patent.

Lern2clue.

It's not a tax trick - it's required by the SEC

[donutello]

Accrual accounting isn't a trick used to balance out taxes or any of the other stuff you mentioned. Accrual accounting is part of the GAAP (Generally Accepted Accounting Practices) and is required by the SEC. You don't recognize revenue until you actually expend the effort required to earn that revenue.

If you sell someone a 3-year contract which they pay you for upfront, you don't declare the money they gave you as income on this years balance sheet because you haven't incurred all the costs associated with that revenue yet. You prorate the income over the period of the contract and each year or quarter you recognize both the revenue and the cost associated with that contract on that year or quarters balance sheet. It's the only way to keep your balance sheet from grossly misstating your business situation.

Re:Don't trust them

[einhverfr]

My first response on hearing about the deal is "no good can come of this." The fact is-- these companies directly compete in most areas and one is *far* stronger than the other.

Apple was an unusual case because Microsoft was investing in them during the hight of the DoJ investigations of their anticompetitive behavior. My own thinking is that Microsoft was terribly afraid that Apple exiting the market would mean that they would be broken up or crippled behind very onerous consent decrees. Apple thus was actually the *stronger* partner in that negotiation because they had something that Microsoft wanted even more than they needed continued support. With Novell, it is not quite the same case.