Its stock price dropped nearly 8% Tuesday after it posted its results for the April quarter.

Although its losses narrowed and revenues were up 6.5%, Wall Street thought it should have done better.

It lost four cents a share, $15.4 million, half what it lost last year, on revenues up $18 million to $294 million compared to last year. If not for a dividend-created charge related to IBM's $50 million investment in the company to thank Novell for buying SUSE, Novell figures it would have earned $14 million, three cents a share, which was the number a supposedly over-optimistic Wall Street thought it could clear even with the charge.

Of course currency exchange rates positively impacted total revenue by $12 million. Uncollected receivables were also up.

CFO Joseph Tibbetts said Novell got about $10 million in revenue from SUSE in the first full quarter since the acquisition: $4 million in retail sales, $3 million in Enterprise revenues and $3 million in stuff like support and alliance fees. SUSE remains unprofitable.

SUSE sold only 3,800 Enterprise subscriptions during the period compared to Red Hat's 87,000 in the March quarter. SUSE's ASPs hovered around $1,000 while Red Hat's were $346 or roughly $3.8 million to Red Hat's $31 million.

Credit Suisse thinks it betokens an early-stage Enterprise business and figures ASPs will drop to something like $375 and volumes grow like Red Hat's as its business matured. The broker is projecting SUSE will have 5% of the unit market by the end of the year and an industry attach rate of 35%.

CSFB thinks cost cutting is in the cards at SUSE. Red Hat will continue to lead.

NetWare's decline also showed some leveling off. It only dropped 2% (5% after adjusting for foreign currency effects) compared to 12% 12 months ago. Novell attributed the NetWare numbers to customer response to the company's Linux strategy.

Novell claims 10,000 developers joined its developer program in the last six months because of Linux and says registered users of Novell Forge, its hosted site for open source projects, are up 60% to 5,000 since it took over SUSE in January. Fifty-five percent of Novell's channel partners are now into Linux, up from 15% early last year.

At the end of the quarter, Novell had $636 million in the bank, up $31 million sequentially due to the IBM money. Deferred revenues equaled $296 million, up 11% year-over-year.

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