Software maker Novell reported a strong 4th quarter, more than doubling analysts' estimates by posting earnings of $320 million.
Banc of America Securities analyst Kirk Materne credited a robust performance at the company's Linux operating system unit, which grew sales 41% over last year's 4th quarter to $61 million. Materne lifted his 2006 earnings projection, citing expected future cost reductions that figure to improve margins.
Open source is clearly picking up steam and Novell is emerging as an interesting bell weather. This should bode well for Sun Microsystems who is also increasingly betting the farm on open source. Microsoft needs to watch these two very carfully.