Longtime Hewlett Executive Named Novell Chief

Company News

Lawrence M. Fisher
The New York Times

April 6, 1994

Novell Inc. today named Robert J. Frankenberg to succeed Raymond J. Noorda as chief executive.

Mr. Frankenberg, who is 46, has spent his entire 25-year career at the Hewlett-Packard Company, most recently as the head of its personal computer business. He takes command of Novell at the most challenging time since Mr. Noorda turned the struggling start-up company around a decade ago.

Mr. Frankenberg was named president and chief executive, not chief operating officer, as previously reported; Mr. Noorda, who will turn 70 in June, continues as chairman.

The company is dissolving its office of the president, whose former members, Mary M. Burnside, chief operating officer, and James R. Tolonen, chief financial officer, will continue their responsibilities and report to Mr. Frankenberg.

News Broadly Leaked

Shares of Novell rose $1.50, to $18.375, in Nasdaq trading today in anticipation of the announcement. Although Novell released its announcement after the close of the market, it had been broadly leaked.

In addition to the market's decline over all, Novell shares had been pounded in recent weeks by investor uncertainty about the company's $1.5 billion acquisition of the Wordperfect Corporation and the Quattro Pro spreadsheet product of Borland International Inc.

Long the leader in software for connecting personal computers on networks, Novell has, through those acquisitions, put itself in more direct competition with the Microsoft Corporation in application programs, like word processors and spreadsheets, and operating systems, which control basic computer and network functions.

Although speculation about Mr. Frankenberg's joining Novell had appeared in the trade press for months, he and Mr. Noorda said in a telephone interview that serious discussions about the move had begun just three weeks ago. That was before the Wordperfect deal, which Mr. Frankenberg said he "very enthusiastic about."

"For me, it was a pivotal item in my decision to join Novell because it makes possible an entirely new category of networked applications which no one else can provide," he said.

As general manager of Hewlett-Packard's personal information products group, Mr. Frankenberg is credited with having revived the company's struggling personal computer unit. He has been the company's liaison with Novell on various partnerships and joint projects.

"He'll bring an understanding of how to deal with big corporate customers, which Novell needs, as well as a lot of understanding of mobile computing, which will be important to Novell's future," said Heidi Dix, an analyst with Forrester Research in Cambridge, Mass. "He does have his work cut out for him; Novell has done a lot of stuff lately but they haven't been real good at following through."

Even before the controversial deal for Wordperfect, Novell was straining to rationalize its acquisition in June 1993 of Unix Systems Laboratories from A.T.& T. in a stock swap valued at about $320 million. While presenting Unix, long the preferred operating system software for technical computing, as an "open" alternative to Microsoft's dominant MS-DOS and Windows, Novell gave the rights to the Unix name and specifications to an industry consortium.

Core Product Under Attack

At the same time, Novell's core product, the Netware operating system, has come under fresh attack by Microsoft's Windows NT, a new operating system with networking.

Large customers have deferred moving to the latest version of Netware, but that reflects not so much the impact of Windows NT than the difficulties inherent in a big systems software upgrade. As a result, Novell earnings have disappointed Wall Street analysts for several quarters. Write-offs associated with Novell's acquisitions resulted in a net loss of $35 million in the 1993 fiscal year, which ended on Oct. 30.

"Bob's a superb manager, but he's walking into a real quagmire because of Ray's decision to try to go head to head with Microsoft," said Rich Edwards, an analyst with Robertson, Stephens & Company, who worked with Mr. Frankenberg at Hewlett-Packard from 1975 to 1983.

Although Novell's somewhat unusual corporate culture stresses cooperation with competing companies and explicitly places customers' and employees' interests ahead of shareholders, Mr. Noorda said he thought his successor would have no problem fitting in.

"We've always modeled ourselves after Hewlett-Packard," he said. "I and Novell have long had a good relationship with Bob and with H.P. in general."

Mr. Frankenberg joined Hewlett-Packard in 1969 as a manufacturing technician and got a bachelor's degree in computer engineering from San Jose State University in 1974. He is married, with two children.

Photo: Raymond J. Noorda, left, stood outside Novell's offices in San Francisco yesterday with the man who will replace him as chief executive of the company, Robert J. Frankenberg. Mr. Noorda will remain as chairman. (Jim Wilson/The New York Times)