Linux troubles for Novell

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: Two years after the rebirth of onetime computer networking titan Novell Inc., the Waltham, Mass. company is still having trouble learning to walk.

At a time when organizations of every kind depend on masses of networked computers, Novell should be prospering. Its software for letting computers share the same files and printers had made Novell the world leader in networking during the early 1990s. And now the company has embraced the free Linux operating system at a time when demand for Linux is soaring.

Instead, Novell may be poised to lay off hundreds of employees because of missteps that have cost it the loyalty of once-faithful customers like Jim Klein, director of information services and technology at the Saugus Union School District in Santa Clarita, Calif. After eight years of using Novell software, Klein expected to move to Novell Linux software during an upgrade last year. Instead, he settled on Linux software from rival Red Hat Inc.

“We really wanted to go with Novell in the beginning. We really did,” said Klein. “But they just didn’t have it together. I think that’s the industry perception as a whole.”

Novell’s revenue has barely budged over the past two years, and the company’s bottom line has bounced from red to black to red again. Last week, Business Week magazine and the ZDNet Internet news service reported that Novell could soon lay off hundreds of its 5,800 employees after the close of its third quarter.

In September, Blum Capital Partners, which owns 5% of Novell’s stock, called for Novell to sell its two jet aircraft, slash research and development spending, and fire 400 engineers. The stock, which traded from $35 to $40 in 1993 and again in 2000, has been languishing below $10 for the past year. .

And last month, Credit Suisse First Boston analyst Jason Maynard boosted his rating on Novell - on condition the board oust chief executive Jack Messman and his team.