SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-Q



              [X] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                   For the Fiscal Quarter Ended July 31, 2000

                                       or

              [ ] Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                         For the transition period from
                                     -------
                                       to
                                   -----------

                         Commission File Number: 0-13351


                                  NOVELL, INC.
             (Exact name of registrant as specified in its charter)

         Delaware                                           87-0393339
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                          Identification No.)


                             1800 South Novell Place
                                Provo, Utah 84606
              (Address of principal executive offices and zip code)

                                 (801) 861-7000
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                    YES X NO

As of August 31, 2000 there were 328,207,679  shares of the Registrant's  Common
Stock outstanding.


<PAGE>


4




PART I.  FINANCIAL INFORMATION, ITEM 1.  FINANCIAL STATEMENTS


                                  NOVELL, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<S>                                                                              <C>                  <C>

                                                                                      Jul. 31,              Oct. 31,
DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA                                    2000                  1999
-------------------------------------------------------------------------------------------------------------------
                                                                                  (Unaudited)
ASSETS
CURRENT ASSETS
   Cash and short-term investments                                                $   676,642          $    895,404
   Receivables, less allowances ($33,700 - July; $36,318 - October)                   214,003               284,510
   Inventories                                                                          3,215                 3,753
   Prepaid expenses                                                                    30,263                47,738
   Deferred and refundable income taxes                                                53,079                60,266
   OTHER CURRENT ASSETS                                                                36,724                43,945
--------------------------------------------------------------------------------------------------------------------

Total current assets                                                                1,013,926             1,335,616

Property, plant and equipment, net                                                    309,290               347,012
Long-term investments                                                                 413,109               229,114
OTHER ASSETS                                                                           56,389                30,577
--------------------------------------------------------------------------------------------------------------------

Total assets                                                                       $1,792,714           $ 1,942,319
====================================================================================================================


LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                              $     81,324         $      85,037
   Accrued compensation                                                                62,424                62,778
   Accrued marketing liabilities                                                       14,375                11,449
   Other accrued liabilities                                                           53,954                50,133
   Income taxes payable                                                                     -                57,085
   DEFERRED REVENUE                                                                   184,677               173,150
-------------------------------------------------------------------------------------------------------------------

Total current liabilities                                                             396,754               439,632

Minority interests                                                                     11,909                10,446

SHAREHOLDERS' EQUITY
   Common stock, par value $.10 per share
   Authorized - 600,000,000 shares
   Issued -     326,159,290 shares-July
                326,593,911 shares-October                                             32,616                32,659
   Additional paid in capital                                                          34,658                     -
   Retained earnings                                                                1,364,558             1,432,624
   Accumulated other comprehensive income                                             (17,174)               35,189
   OTHER                                                                              (30,607)               (8,231)
-------------------------------------------------------------------------------------------------------------------

TOTAL SHAREHOLDERS' EQUITY                                                          1,384,051             1,492,241
-------------------------------------------------------------------------------------------------------------------

Total liabilities and shareholders' equity                                         $1,792,714           $ 1,942,319
====================================================================================================================
</TABLE>

See notes to consolidated unaudited condensed financial statements.


<PAGE>


                                  NOVELL, INC.
              CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF INCOME

<TABLE>
<S>                                                  <C>               <C>              <C>              <C>

                                                        FISCAL QUARTER ENDED                 NINE MONTHS ENDED
                                                      --------------------------          -----------------------
Dollars in thousands,                                  Jul. 31,          Jul. 31,         Jul. 31,         Jul. 31,
EXCEPT PER SHARE DATA                                     2000              1999             2000          1999
------------------------------------------------------------------------------------------------------------------

Net sales                                            $ 270,019         $ 326,808        $ 888,411         $ 928,266
COST OF SALES                                           85,547            76,089          249,145           223,223
-------------------------------------------------------------------------------------------------------------------
Gross profit                                           184,472           250,719          639,266           705,043

OPERATING EXPENSES
   Sales and marketing                                 123,991           108,806          364,054           320,647
   Product development                                  60,574            58,782          180,611           174,068
   GENERAL AND ADMINISTRATIVE                           18,790            20,692           58,715            62,102
-------------------------------------------------------------------------------------------------------------------

TOTAL OPERATING EXPENSES                               203,355           188,280          603,380           556,817
-------------------------------------------------------------------------------------------------------------------

Income (loss) from operations                          (18,883)           62,439           35,886           148,226

OTHER INCOME (EXPENSE)
   Investment income                                    32,892            10,260           87,470            30,676
   OTHER, NET                                           (2,105)           (4,211)          (6,097)          (16,491)
--------------------------------------------------------------------------------------------------------------------

OTHER INCOME, NET                                       30,787             6,049           81,373            14,185
-------------------------------------------------------------------------------------------------------------------

Income before taxes                                     11,904            68,488          117,259           162,411
INCOME TAXES                                             3,332            19,177           32,832            45,476
-------------------------------------------------------------------------------------------------------------------

Net income                                           $   8,572         $  49,311         $ 84,427        $  116,935
===================================================================================================================

Weighted average shares outstanding
   Basic                                               325,315           334,488          326,336           335,735
   Diluted                                             327,259           350,951          336,970           351,196
===================================================================================================================

Net income per share
   Basic                                          $      0.03        $      0.15     $       0.26        $     0.35
   Diluted                                        $      0.03        $      0.14     $       0.25        $     0.33
===================================================================================================================
</TABLE>

See notes to consolidated unaudited condensed financial statements.

<PAGE>


                                  NOVELL, INC.
            CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<S>                                                                               <C>                <C>

                                                                                         NINE MONTHS ENDED
                                                                                    -------------------------------
                                                                                      Jul. 31,              Jul. 31,
DOLLARS IN THOUSANDS                                                                    2000                 1999
-------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                     $    84,427         $     116,935

ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
   Depreciation and amortization                                                       61,982                47,517
   Stock plans' income tax benefits                                                    61,453                46,972
   Decrease in receivables                                                             70,507                11,916
   Decrease in inventories                                                                538                   617
   Decrease in prepaid expenses                                                        17,475                14,960
   Decrease in deferred and refundable income taxes                                    31,144                20,711
   Decrease in other current assets                                                     7,221                 2,541
   (DECREASE) IN CURRENT LIABILITIES, NET                                             (42,878)              (14,159)
-------------------------------------------------------------------------------------------------------------------

NET CASH PROVIDED FROM OPERATING ACTIVITIES                                           291,869               248,010
-------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Issuance of common stock, net                                                       74,545                79,832
   REPURCHASE OF COMMON STOCK                                                        (301,011)             (203,638)
-------------------------------------------------------------------------------------------------------------------

NET CASH USED BY FINANCING ACTIVITIES                                                (226,466)             (123,806)
-------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Expenditures for property, plant and equipment                                     (43,359)              (50,988)
   Proceed from sale of property, plant and equipment                                  33,079                     -
   Purchases of short-term investments                                               (701,969)           (1,597,672)
   Maturities of short-term investments                                               626,277             1,190,733
   Sales of short-term investments                                                    330,666               552,468
   Expenditures for other long-term investments                                      (186,780)              (35,022)
   Increase in restricted cash                                                        (36,881)              (77,195)
   OTHER                                                                                  851                 1,608
   ----------------------------------------------------------------------------------------------------------------

NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                                       21,884               (16,068)
--------------------------------------------------------------------------------------------------------------------

TOTAL INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 87,287               108,136

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                       274,269               155,493
--------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                             361,556               263,629

SHORT-TERM INVESTMENTS - END OF PERIOD                                                315,086               728,572
--------------------------------------------------------------------------------------------------------------------

CASH AND SHORT-TERM INVESTMENTS - END OF PERIOD                                     $ 676,642             $ 992,201
====================================================================================================================

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Issuance of restricted stock for acquisitions                                       $  17,366     $              --
</TABLE>

See notes to consolidated unaudited condensed financial statements.


<PAGE>


                                  NOVELL, INC.
         NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS



A.   QUARTERLY FINANCIAL STATEMENTS

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the amounts  reported in the financial  statements
     and accompanying  notes.  Actual results could differ from those estimates.
     The accompanying consolidated unaudited condensed financial statements have
     been prepared in accordance  with the  instructions to Form 10-Q but do not
     include all of the information and footnotes required by generally accepted
     accounting  principles and should,  therefore,  be read in conjunction with
     the Company's  fiscal 1999 Annual Report to  Shareholders.  These financial
     statements  do include all normal  recurring  adjustments  that the Company
     believes  necessary for a fair presentation of the statements.  The interim
     operating results are not necessarily  indicative of the results for a full
     year. Certain  reclassifications,  none of which affected net income,  have
     been made to the prior  years'  amounts in order to conform to the  current
     years' presentation.


B.   CASH AND SHORT-TERM INVESTMENTS

     Marketable  debt  and  equity  securities  that  are  included  in cash and
     short-term  investments  are considered  available-for-sale  and carried at
     fair  market  value,  with the  unrealized  gains and  losses,  net of tax,
     included in  comprehensive  income.  Fair market values are based on quoted
     market prices at the end of the period,  where available;  if quoted market
     prices  are not  available,  then fair  market  values  are based on quoted
     market prices of comparable instruments. Municipal securities and corporate
     notes  and  bonds  included  in  short-term  investments  have  contractual
     maturities  from  1-7  years.  Money  market  preferreds  have  contractual
     maturities  of less than 180 days.  No other  short-term  investments  have
     contractual  maturities.  The  cost  of  securities  sold is  based  on the
     specific  identification method. Such securities are anticipated to be used
     for current operations and are therefore classified as current assets, even
     though some maturities may extend beyond one year.

     The following is a summary of cash and short-term investments, all of which
     are considered available-for-sale.
<TABLE>
<S>                                              <C>                 <C>            <C>             <C>

                                                                           Gross            Gross              Fair
                                                       Cost at        Unrealized       Unrealized   Market Value at
 (DOLLARS IN THOUSANDS)                          JUL. 31, 2000             GAINS           LOSSES     JUL. 31, 2000
 ------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
     Cash                                          $   100,831   $             -    $          -        $   100,831
     MONEY MARKET FUND                                 260,725                 -               -            260,725
-------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS                              361,556                 -               -            361,556
--------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS
     Corporate Notes and Bonds                          46,216               104                -            46,320
     Municipal securities                              181,936                 -           (1,936)          180,000
     Mutual funds                                       52,713                 1           (4,128)           48,586
     EQUITY SECURITIES                                  23,815            22,639           (6,274)           40,180
-------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS                                 304,680            22,744          (12,338)          315,086
-------------------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS                    $   666,236       $    22,744       $  (12,338)      $   676,642
---------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>

<TABLE>
<S>                                             <C>                <C>               <C>            <C>

                                                                           Gross            Gross              Fair
                                                       Cost at        Unrealized       Unrealized   Market Value at
(DOLLARS IN THOUSANDS)                           OCT. 31, 1999             GAINS           LOSSES     OCT. 31, 1999
-------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
     Cash                                            $ 186,689      $          -      $       -           $ 186,689
     MONEY MARKET FUND                                  87,580                 -              -              87,580
-------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS                              274,269                 -              -             274,269
-------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS
     Municipal securities                              411,938                 3           (2,393)          409,548
     Money market mutual funds                          93,894                 -              -              93,894
     Money market preferreds                            33,000                 -              -              33,000
     Mutual funds                                       15,873                 -             (102)           15,771
     EQUITY SECURITIES                                   4,949            64,619             (646)           68,922
-------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS                                 559,654            64,622           (3,141)          621,135
-------------------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS                      $ 833,923          $ 64,622         $ (3,141)        $ 895,404
-------------------------------------------------------------------------------------------------------------------
</TABLE>

     During the first nine months of fiscal 2000 the Company  realized  gains of
     $52.7 million and realized losses of $1.6 million on the sale of securities
     compared to realized  gains of $49.4  million and realized  losses of $56.3
     million in the first nine months of fiscal 1999.


C.   LONG-TERM INVESTMENTS

     The Company's  long-term  investments  consist of  investments  in start-up
     software and internet  companies,  venture  capital  funds,  other publicly
     traded securities,  and restricted cash held as collateral.  Investments in
     start-up  software and internet  companies  and venture  capital  funds are
     recorded at cost as the company does not have  controlling  interest in any
     of the respective companies.  Investments in publicly traded securities are
     stated at fair value,  based on market quotes.  As of July 31, 2000,  there
     were $33.8 million in unrealized losses on long-term investments.

D.   INCOME TAXES

     The  Company's  estimated  effective  tax rate for the first nine months of
     fiscal 2000 was 28.0%, the same as in the first nine months of fiscal 1999.
     The  Company  paid cash  amounts for income  taxes of $21.3  million in the
     first nine months of fiscal 2000 and $5.5 million during the same period of
     fiscal 1999.


E.   COMMITMENTS AND CONTINGENCIES

     The Company  currently has a $10 million  unsecured  revolving bank line of
     credit,  with interest  payable at the prime rate. The line can be used for
     either letter of credit or working capital purposes. The line is subject to
     the  terms  of  a  loan  agreement   containing   financial  covenants  and
     restrictions,  none of which  are  expected  to  significantly  affect  the
     Company's  operations.  At July  31,  2000  borrowings,  letter  of  credit
     acceptances or commitments of  approximately  $1.9 million were outstanding
     under this line.  The Company  also has a $10  million  line of credit with
     another bank,  which is not subject to a loan  agreement.  At July 31, 2000
     there were no  standby  letters  of credit  outstanding  under this line of
     credit.  In fiscal  1997,  the Company  entered  into  agreements  to lease
     buildings  being  constructed  on land  owned by the  Company  in San Jose,
     California  and in Provo,  Utah.  The lessor has funded  $223  million  for
     construction  of the buildings.  The leases are for a period of seven years
     and can be renewed  for two  additional  five year  periods,  by either the
     lender or the Company,  subject to the  approval of the other  party.  Rent
     obligations  commenced during the second quarter of fiscal 1999 for the San
     Jose  buildings and during the second  quarter of fiscal 2000 for the Provo
     building.  Annual rent under each  agreement  is  determined  by taking the
     portion  of  the  committed   amount   actually   utilized  and  associated
     capitalized  interest accrued during the construction  period multiplied by
     the secured  interest rate. If the Company does not purchase the buildings,
     or arrange  for the sale of the  buildings,  at the end of the  lease,  the
     Company will guarantee the lessor no more than 85% of the residual value of
     the  buildings.  The  guaranteed  residual  value  at July  31,  2000,  was
     approximately  $190  million.  In  addition,  the  agreement  calls for the
     Company  to  maintain  a  specific  level  of  restricted  cash to serve as
     collateral for the leases and maintain  compliance  with certain  financial
     covenants. The value of restricted cash held as collateral at July 31, 2000
     was approximately $223.0 million, and is included in long-term investments.
     In  February  1998,  a suit was filed  against  Novell  and  certain of its
     officers and directors,  alleging violation of federal securities laws. The
     lawsuit was brought as a purported  class action on behalf of purchasers of
     Novell common stock from November 1, 1996 through April 22, 1997.  The case
     is in its  preliminary  stages.  Novell  believes  that the case is without
     merit,  and intends to vigorously  defend  against the  allegations.  While
     there  can be no  assurance  as to the  ultimate  disposition  of the case,
     Novell does not believe that the resolution of this  litigation will have a
     material adverse effect on its financial  position,  results of operations,
     or cash flows.  The Company is a party to a number of legal claims  arising
     in the  ordinary  course of  business.  The Company  believes  the ultimate
     resolution  of the claims  will not have a material  adverse  effect on its
     financial position, results of operations, or cash flows.


 F.   SEGMENT INFORMATION

     The Company operates in one business segment,  directory-enabled networking
     software and  services.  The  Company's  products are sold  throughout  the
     world.  In the  United  States,  products  are sold  through  direct,  OEM,
     reseller, and distributor channels. Internationally,  products are marketed
     through distributors who sell to dealers and end users.  Performance of the
     Company is evaluated by the  Company's  chief  decision  makers,  the Chief
     Executive  Officer and Executive  Council,  based on total Company results.
     Revenue is evaluated  based on geographic  region and by product  category.
     Separate  financial  information  is not  available by product  category in
     regards to asset allocation, expense allocation, or profitability. Novell's
     products can be categorized  into the following four areas,  all within the
     directory-enabled networking software and services segment.

     o  Directory-enabled server platforms, which includes NetWare 4 and
        NetWare 5
     o  Directory-enabled  applications  products,  which include NetWare for
        SAA host  connectivity  products,   BorderManager,  NDS  integration and
        high availability  service  products,  as well as  collaboration  and
        management products including GroupWise,  ManageWise, and ZENworks
     o  Service, education and  consulting   revenue,   which  is  generated
        from  customer  service, educational  products and courses,  and
        consulting for network  solutions
     o  Pre-directory product revenue consisting of NetWare 3, non-directory-
        enabled infrastructure products and UNIX royalties


<PAGE>

<TABLE>
<S>                                                <C>                <C>            <C>              <C>

REVENUE BY PRODUCT CATEGORY                            FISCAL QUARTER ENDED              NINE MONTHS ENDED
---------------------------                      -------------------------------    ----------------------------
                                                      Jul. 31,          Jul. 31,         Jul. 31,       Jul. 31,
DOLLARS IN THOUSANDS                                      2000              1999             2000           1999
----------------------------------------------------------------------------------------------------------------

Directory-enabled server platforms                   $ 119,966        $ 169,266         $ 389,648      $ 483,910
Directory-enabled applications                          78,144            80,148          237,098        225,501
Service, education and consulting                       55,556            49,054          161,936        130,487
Pre-directory product revenue                          16,353            28,340            99,729         88,368
                                                  ------------      ------------      -----------     ----------
  Total net sales                                   $ 270,019         $ 326,808         $ 888,411      $ 928,266
                                                    ==========        ==========        =========      =========
</TABLE>

     Sales outside the U.S. are comprised of sales to international customers in
     Europe, the Middle East,  Canada,  South America,  and Asia Pacific.  Other
     than sales in Ireland,  international sales were not material  individually
     in any other  international  location.  For the first nine months of fiscal
     2000 and fiscal 1999, sales to international  customers were  approximately
     $385 million and $421  million,  respectively.  In the first nine months of
     fiscal 2000 and fiscal 1999, 66% and 71%,  respectively,  of  international
     sales were to European countries.  No one foreign country accounted for 10%
     or more of total sales in either period. There were no customers accounting
     for more than 10% of total  revenue  during the first nine months of fiscal
     2000.  One  multi-national  distributor  accounted for 11% of total revenue
     during the first nine months of fiscal 1999.


G.   NET INCOME PER SHARE
<TABLE>
<S>                                                 <C>                <C>            <C>                 <C>
                                                         FISCAL QUARTER ENDED                NINE MONTHS ENDED
                                                      --------------------------         -------------------------
                                                       Jul. 31,          Jul. 31,         Jul. 31,         Jul. 31,
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA               2000              1999             2000              1999
-------------------------------------------------------------------------------------------------------------------
Basic net income per share computation
     NET INCOME                                      $   8,572        $   49,311       $   84,427       $   116,935
-------------------------------------------------------------------------------------------------------------------
     WEIGHTED AVERAGE SHARES OUTSTANDING               325,315           334,488          326,336           335,735
-------------------------------------------------------------------------------------------------------------------
         Basic net income per share                  $    0.03        $     0.15       $     0.26       $      0.35
===================================================================================================================

Diluted net income per share computation
     NET INCOME                                      $   8,572         $  49,311       $   84,427        $  116,935
-------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding                    325,315           334,488          326,336           335,735
Incremental shares attributable to exercise of
     OUTSTANDING OPTIONS (TREASURY STOCK METHOD)         1,944            16,463           10,634            15,461
-------------------------------------------------------------------------------------------------------------------
     TOTAL                                             327,259           350,951          336,970           351,196
-------------------------------------------------------------------------------------------------------------------
         Diluted net income per share              $      0.03       $      0.14      $      0.25        $     0.33
===================================================================================================================
</TABLE>


<PAGE>


H.   COMPREHENSIVE INCOME

     The components of comprehensive  income (loss), net of tax, for the quarter
     and first nine months ended July 31, 2000 and 1999 were as follows:

<TABLE>
<S>                                                 <C>               <C>             <C>              <C>
                                                     FISCAL QUARTER ENDED                   NINE MONTHS ENDED
                                                --------------------------------      -----------------------------
                                                      Jul. 31,          Jul. 31,         Jul. 31,          Jul. 31,
DOLLARS IN THOUSANDS                                      2000              1999             2000              1999
-------------------------------------------------------------------------------------------------------------------
Net income                                           $   8,572         $  49,311       $   84,427      $   116,935
Change in net unrealized gain on investments           (32,329)            1,554          (52,110)          22,427
CHANGE IN CUMULATIVE TRANSLATION ADJUSTMENT               (176)             (732)            (253)            (821)
-------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss)                          $ (23,933)        $  50,133       $   32,064      $   138,541
==================================================================================================================
</TABLE>

     The components of accumulated other  comprehensive  income,  net of related
     tax, at July 31, 2000 and 1999, are as follows:

<TABLE>
<S>                                                                          <C>              <C>
                                                                        Jul. 31,         Oct. 31,
DOLLARS IN THOUSANDS                                                        2000             1999
-------------------------------------------------------------------------------------------------
Net unrealized gain (loss) on investment                              $  (14,348)       $  37,762
CUMULATIVE TRANSLATION ADJUSTMENT                                         (2,826)          (2,573)
--------------------------------------------------------------------------------------------------
Accumulated other comprehensive income                                $  (17,174)       $  35,189
=================================================================================================
</TABLE>

<PAGE>




I.   RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial  Accounting Standards Board issued Statement of
     Financial   Accounting   Standards  No.  133,  "Accounting  for  Derivative
     Instruments  and  Hedging  Activities,"  (SFAS 133).  SFAS 133  established
     accounting and reporting  standards for derivative  instruments,  including
     certain derivative  instruments embedded in other contracts and for hedging
     activities.  SFAS 133 requires all  companies to recognize  derivatives  as
     either assets or  liabilities  in the  statement of financial  position and
     measure those  instruments  at fair value.  This statement is effective for
     all fiscal  quarters  of fiscal  years  beginning  after July 1, 2000.  The
     Company is currently  assessing the potential  impact SFAS 133 will have on
     the statement of financial  position of the Company.  In December 1999, the
     Securities and Exchange  Commission (SEC) issued Staff Accounting  Bulletin
     No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements." SAB 101
     summarizes  certain  of the  SEC's  views in  applying  generally  accepted
     accounting principles to revenue recognition in financial  statements.  The
     Company is  required  to adopt SAB 101 no later  than the first  quarter of
     fiscal 2001.  Novell is currently  evaluating  the impact of SAB 101 on the
     Company's results of operations and financial position.

M.   SUBSEQUENT EVENTS

     On September 6, 2000,  the Company  announced it was reducing its workforce
     by approximately 16 percent,  writing off certain assets,  and implementing
     cost savings in an effort to improve the Company's business performance and
     to free up  dollars  to  spend  on key  sales,  marketing  and  development
     initiatives.  The Company anticipates taking a restructuring charge related
     to these actions of  approximately  $40 to $50 million in its fourth fiscal
     quarter of 2000.



<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS



This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  and other parts of this  Quarterly  Report  contain  forward-looking
statements that involve risks and uncertainties.  All forward-looking statements
are based on  information  available to the Company on the date hereof,  and the
Company assumes no obligation to update any such forward-looking statements. The
Company's  actual results may differ  materially  from the results  discussed in
such  forward-looking  statements  as a result  of a number  of  factors,  which
include, but are certainly not limited to, those set forth below in the sections
entitled  "Future  Results," and "Euro  Conversion."  Readers  should  carefully
review the risk factors described in other documents that the Company files from
time to time with the  Commission,  including the Annual Report on Form 10-K and
the Quarterly Reports on Form 10-Q to be filed by the Company in Fiscal 2000.


INTRODUCTION

Novell,  Inc.,  is a leading  provider of Net services  software  that  delivers
services to secure and power all types of networks--the Internet, intranets, and
extranets;  wired to wireless;  corporate and  public--across  leading operating
systems.  Novell's Net services  software provides the foundation for one Net--a
single  global  network that  supports new  applications  and forms of business.
Worldwide channel,  consulting,  education and technical support programs, along
with strategic alliances,  combine Novell Net services software with third-party
products and services to form complete Net solutions.

RESULTS OF OPERATIONS

NET SALES
<TABLE>
<S>                                                <C>         <C>       <C>          <C>         <C>     <C>
                                                          Q3                    Q3          YTD                 YTD
                                                        2000        CHG       1999         2000      CHG       1999
-------------------------------------------------------------------------------------------------------------------

Net sales (thousands)                              $ 270,019  (17.4)%    $ 326,808    $ 888,411  (4.3)%    $928,266
===================================================================================================================
</TABLE>

Novell's  products can be categorized  into the following four areas, all within
the directory-enabled networking software services segment.

o  Directory-enabled server platforms, which includes NetWare 4 and NetWare 5
o  Directory-enabled  applications  products,  or Net Services  Software,  which
   include  NetWare  for SAA  host  connectivity  products,  BorderManager,  NDS
   integration and high availability service products,  as well as collaboration
   and management products including GroupWise, ManageWise, and ZENworks
o  Service,  education and consulting revenue,  which is generated from customer
   service,  educational  products  and  courses,  and  consulting  for  network
   solutions
o Pre-directory  product revenue consisting of NetWare 3,  non-directory-enabled
infrastructure products and UNIX royalties

Revenue from the  directory-enabled  server platforms  category  decreased $49.3
million or 29% in the third  quarter of 2000  compared  to the third  quarter of
1999.  Year-to-date,  directory-enabled  server platform revenue decreased $94.3
million  or  20%.  These  decreases  are due  primarily  to the  decline  in the
Company's packaged software  business,  which saw a decline in sales of 63% from
the prior year third quarter and 54% year-to-date compared to the same period of
1999.  Lower packaged  software  sales  resulted from: o the Company's  focus on
building a direct sales force and organizational changes, o inadequate attention
by the Company to its channel  resellers  in  generating  demand,  training  and
support for Novell products,
   and
o the launch of  competitor  products,  which  shifted  reseller's  training and
promoting efforts from Novell's products. In addition, the Company believes that
a portion of the decline was due to lower demand related to post Y2K purchases.

Revenue from the  directory-enabled  applications  products was $78.1 million in
the third  quarter of 2000  compared  to $80.1  million in the third  quarter of
1999.  The 2.5%  decrease  was mainly due to  decreased  sales of the  Company's
management and  collaboration  products and NetWare for SAA,  offset slightly by
increased  sales  of  Border  Manager.  At the end of the  third  quarter  2000,
year-to-date  directory-enabled  applications product revenue was $237.1 million
compared  to  $225.5  million  for the same  period  of 1999.  The  increase  in
year-to-date revenue was driven by increased sales of management & collaboration
products,  Border Manager, NDS for NT and Solaris, and Single Sign-on,  slightly
offset by a decrease in NetWare for SAA.

Service,  education and consulting revenues were $55.6 million and $49.1 million
in the third  quarter  of 2000 and  1999,  respectively.  Year-to-date  service,
education and  consulting  revenues were $161.9 million and $130.5  million,  in
2000 and 1999, respectively.  The increase in the third quarter and year-to-date
revenue  was  a  result  of  increased  directory-related   consulting  revenue,
increased service revenue as a result of increased site licenses, and an overall
growth in consulting.

Pre-directory  products  revenue was $16.4  million in the third quarter of 2000
compared to $28.3 million in the third quarter of 1999.  Pre-directory  products
revenue  year-to-date  2000 was $99.7 million  compared to $88.4 million for the
same period of 1999. The decrease in revenue from third quarter 1999 to 2000 was
primarily  due to the  discontinuation  of NetWare 3 products.  The  increase in
year-to-date revenue was primarily the result of a $35.5 million royalty payment
from  Caldera,  Inc.,  the  principal  portion of which  relates to an antitrust
settlement between Caldera, Inc. and Microsoft recorded in the second quarter of
fiscal 2000, and higher royalty revenue  related to the UNIX royalties.  Without
the Caldera  revenue,  year-to-date  pre-directory  products  revenue would have
decreased $24.2 million or 27% year-to-date compared to the same period of 1999.
This decrease was due primarily to the lower sales through channel resellers and
the announced discontinuation of the NetWare 3 products.

International  sales  represented 43% of total sales in the first nine months of
2000  compared  to 45% in the first  nine  months of fiscal  1999.  Without  the
effects  of the  Caldera  revenue  recorded  in the  U.S.,  international  sales
represented  45% of total  sales in the first  nine  months of 2000.  During the
first  nine  months of  fiscal  2000,  international  revenue  decreased  8% and
domestic revenue, excluding Caldera, decreased 8% compared to the same period of
1999. Internationally,  weak sales in Europe more than offset increased sales in
Japan and Canada causing the decline.

The  Company is  currently  addressing  the decline in sales,  particularly  the
decrease in channel sales,  in an effort to improve  results in future  periods.
The Company  has  reorganized  their  sales  force and product  groups to better
service its  customers  and to focus it  resources  on taking  advantage  of new
opportunities  . The Company  anticipates  these  changes  will take a couple of
quarters to fully implement before realizing the benefits from these changes.

GROSS PROFIT
<TABLE>
<S>                                               <C>         <C>        <C>          <C>        <C>       <C>
                                                        Q3                     Q3          YTD                  YTD
                                                      2000      CHG          1999         2000    CHG          1999
-------------------------------------------------------------------------------------------------------------------
Gross profit (thousands)                          $184,472    (26.4)%    $250,719     $639,266   (9.3)%    $705,043
Percentage of net sales                             68.3%                  76.7%        72.0%                 76.0%
==================================================================================================================
</TABLE>

Gross  profit  as a  percentage  of sales  decreased  in the third  quarter  and
year-to-date  2000  compared to the same periods of fiscal 1999 due primarily to
the effects of decreased product sales levels, higher costs for services related
to the  Company's  consulting  business,  and  increased  training and education
costs. Year-to-date,  these increases were slightly offset by the effects of the
Caldera revenue and lower royalty costs.  Excluding the Caldera  revenue,  gross
profit as a percentage of sales would have been 70.1% year-to-date 2000.



<PAGE>


OPERATING EXPENSES
<TABLE>
<S>                                                <C>          <C>      <C>         <C>        <C>         <C>
                                                          Q3                   Q3         YTD                   YTD
                                                        2000      CHG        1999        2000        CHG       1999
-------------------------------------------------------------------------------------------------------------------
Sales and marketing (thousands)                    $ 123,991   14.0%    $ 108,806     $364,054   13.5%     $320,647
PERCENTAGE OF NET SALES                                 45.9%               33.3%         41.0%               34.5%
------------------------------------------------------------------------------------------------------------------
Product development (thousands)                    $  60,574    3.0%    $  58,782     $180,611    3.8%     $174,068
PERCENTAGE OF NET SALES                                 22.4%               18.0%         20.3%               18.8%
------------------------------------------------------------------------------------------------------------------
General and administrative (thousands)             $  18,790   (9.2)%   $  20,692     $ 58,715   (5.5)%    $ 62,102
PERCENTAGE OF NET SALES                                  7.0%                6.3%          6.6%                6.7%
------------------------------------------------------------------------------------------------------------------
Total operating expenses (thousands)               $ 203,355    8.0%    $ 188,280     $603,380    8.4%     $556,817
Percentage of net sales                                 75.3%               57.6%         67.9%               60.0%
==================================================================================================================
</TABLE>

Sales and marketing expenses increased by $15.2 million, in the third quarter of
fiscal 2000 and by $43.4  million  year-to-date  in fiscal 2000  compared to the
same periods of fiscal 1999. Sales and marketing expenses fluctuate in any given
period due to timing of product  promotions,  advertising or other discretionary
expenses. Also during fiscal 2000, the Company increased its sales and marketing
expenditures, where appropriate, in an effort to focus on improving future sales
growth by reorganizing  these groups around new geographies,  solution  selling,
channel  support and new product  groups.  Lower sales during fiscal 2000 caused
sales and marketing expenses as a percentage of sales to increase.

Product  development  expenses  increased  $1.8 million in the third quarter and
$6.5 million  year-to-date in fiscal 2000 compared to the same periods of fiscal
1999. Product  development  expenses also increased as a percentage of net sales
in the third quarter and year-to-date 2000 due to lower sales levels.

General and administrative  expenses decreased in total during the third quarter
of fiscal 2000  compared to the third  quarter of fiscal 1999,  primarily due to
lower operating costs, slightly offset by increased bad debt expense.  Decreased
sales  levels in fiscal 2000 caused  general  and  administrative  expenses as a
percentage  of sales to increase in the third quarter of fiscal 2000 compared to
the same period of fiscal 1999. Year-to-date general and administrative expenses
decreased  in total and as a  percentage  of sales as the Company  continued  to
focus on controlling these types of costs.

On September  6, 2000,  the Company  announced it was reducing its  workforce by
approximately  16 percent,  writing off certain assets,  and  implementing  cost
savings in an effort to improve the Company's  business  performance and to free
up dollars to spend on key sales,  marketing and  development  initiatives.  The
Company  anticipates  taking a restructuring  charge related to these actions of
approximately $40 to $50 million in its fourth fiscal quarter of 2000.

Workforce reductions are estimated to affect 900 positions and overall quarterly
cost of doing  business is expected  to  decrease by  approximately  $25 million
beginning in the first fiscal quarter of 2001. Total quarterly  savings from the
restructuring  are  approximately  $45 million,  but  increased  spending on Net
service related initiatives will offset approximately $20 million of the initial
quarterly savings.

<TABLE>
<S>                                                            <C>                    <C>                   <C>

                                                                    YTD                                         YTD
                                                                   2000                CHANGE                  1999
-------------------------------------------------------------------------------------------------------------------
Employees                                                         5,479                 5.3%                  5,204
Annualized revenue per average employee (000's)                 $   222               (12.9)%                  $255
 Annualized net income per average employee (000's)             $ 21.0                (34.6)%                $ 32.1
===================================================================================================================
</TABLE>

Headcount increased from the third quarter of 1999 to the third quarter of 2000,
primarily due to increases in the education,  consulting,  worldwide  sales, and
product development areas.


OTHER INCOME, NET
<TABLE>
<S>                                                 <C>           <C>       <C>        <C>        <C>       <C>
                                                          Q3                    Q3         YTD                  YTD
                                                        2000        CHG       1999        2000       CHG       1999
-------------------------------------------------------------------------------------------------------------------
Other income, net (thousands)                       $ 30,787      409.0%    $6,049    $ 81,373    473.7%    $14,185
Percentage of net sales                                 11.4%                  1.9%        9.2%                 1.5%
===================================================================================================================
</TABLE>

The primary component of other income, net is investment income, which was $32.9
million in the third  quarter of fiscal 2000  compared  to $10.3  million in the
third quarter of fiscal 1999.  Year-to-date  investment income was $87.5 million
in 2000 compared to $30.1 million in 1999.  Included in investment income during
the first nine months of 2000 were realized  capital  losses of $1.6 million and
realized  capital gains of $52.7 million.  During the first nine months of 1999,
realized capital losses were $56.3 million and realized capital gains were $49.4
million.

In addition to  investment  income,  the  Company  recognized  a gain on foreign
currency  and higher  sublease  income from an increase in  subleases  in fiscal
2000. This additional income was slightly offset by higher losses on fixed asset
sales during the third  quarter of fiscal 2000.  During the first nine months of
fiscal  1999,  the Company  incurred a loss on foreign  currency  and  increased
miscellaneous   expenses   related  to  the   write-off  of  certain   long-term
investments.

INCOME TAXES
<TABLE>
<S>                                                 <C>         <C>        <C>         <C>        <C>       <C>
                                                          Q3                    Q3          YTD                 YTD
                                                        2000        CHG       1999         2000      CHG       1999
-------------------------------------------------------------------------------------------------------------------
 Income taxes (thousands)                           $  3,332   (82.6)%     $19,177    $  32,832  (27.8)%    $45,476
 Percentage of net sales                                 1.2%                  5.9%         3.7%               4.9%
 Effective tax rate                                     28.0%                 28.0%        28.0%              28.0%
 =================================================================================================================
</TABLE>

The  effective  tax rate for fiscal 2000 is  estimated  to be 28%,  the same as
fiscal 1999.

NET INCOME AND NET INCOME PER SHARE
<TABLE>
<S>                                                   <C>       <C>        <C>         <C>      <C>          <C>
                                                          Q3                    Q3        YTD                   YTD
                                                        2000        CHG       1999       2000       CHG        1999
-------------------------------------------------------------------------------------------------------------------
Net income (thousands)                                $8,572    (82.6)%    $49,311     $84,427  (27.8)%    $116,935
Percentage of net sales                                  3.2%                 15.1%        9.5%               12.6%
Net income per share - basic                          $0.03                 $0.15       $0.26                $0.35
Net income per share - diluted                        $0.03                 $0.14       $0.25                $0.33
==================================================================================================================
</TABLE>



LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<S>                                                            <C>                    <C>                 <C>
                                                                     Q3                                          Q4
                                                                   2000                CHANGE                  1999
-------------------------------------------------------------------------------------------------------------------
Cash and short-term investments (thousands)                    $676,642                (24.4)%             $895,404
Percentage of total assets                                         37.7%                                      46.1%
==================================================================================================================
</TABLE>

Cash and  short-term  investments  decreased by $218.8  million at July 31, 2000
from $895.4 million at October 31, 1999.  During the first nine months of fiscal
2000, cash and short-term  investments  decreased due to cash outflows of $301.0
million for the repurchase of common stock,  $237.0 million for net purchases of
long-term investments and other long term investing activities, $36.9 million to
increase  collateral  associated with certain long-term  investments,  and $43.4
million to purchase  property,  plant and  equipment.  These cash  outflows were
offset by $291.9 million provided from operating activities,  $74.5 million from
the issuance of common  stock,  and $33.1 million cash received from the sale of
certain facilities in Orem, Utah.

The  Company's  investment  portfolio  includes  equity  securities  with  gross
unrealized gains of $22.7 million and gross  unrealized  losses of $46.2 million
as of July 31, 2000.  Included in the  Company's  unrealized  losses at July 31,
2000 was the Company's  investment in  marchFIRST,  Inc.,  which had  unrealized
losses of $33.8 million.  No other individual  security had material  unrealized
losses as of the end of the second quarter 2000.

The investment  portfolio is diversified among security types,  industry groups,
and individual issuers. To achieve potentially higher returns, a limited portion
of the  Company's  investment  portfolio  is invested in equity  securities  and
mutual funds, which incur market risk. The Company believes that the market risk
has been  limited by  diversification  and by use of a funds  management  timing
service  which  switches  funds out of mutual  funds and into money market funds
when preset signals occur.

The Company's  principal source of liquidity has been from  operations.  At July
31, 2000, the Company's  principal unused sources of liquidity consisted of cash
and short-term  investments and available  borrowing  capacity of  approximately
$18.1 million under its credit  facilities.  The Company's  liquidity  needs are
principally for the Company's financing of accounts receivable,  capital assets,
strategic  investments,  product  development  and  flexibility in a dynamic and
competitive operating environment.

During the first nine months of fiscal 2000,  the Company  continued to generate
cash from  operations.  The Company  anticipates  being able to fund its current
operations  and capital  expenditures  planned for the  foreseeable  future with
existing cash and  short-term  investments  together with  internally  generated
funds.   The  Company  believes  that  borrowings  under  the  Company's  credit
facilities or public offerings of equity or debt securities are available if the
need arises.  Investments  will continue in product  development  and in new and
existing  areas  of  technology.  Cash may  also be used to  acquire  technology
through  purchases and strategic  acquisitions.  Capital  expenditures in fiscal
2000 are anticipated to be approximately $65.0 million,  but could be reduced if
the growth of the Company is less than presently anticipated.

In July 1999,  the Board of  Directors  authorized  up to $500  million  for the
repurchase of outstanding  shares of the Company's  common stock through October
31,  2000.  During the first  half of fiscal  2000,  10.6  million  shares  were
repurchased  under this plan at a total cost of $301.0  million  completing  the
repurchases  under this plan. In August 2000, the Board of Directors  authorized
up to an additional  $500 million for the  repurchase of additional  outstanding
shares.

As the  Company  continues  to  consolidate  its Utah  operations  to its  Provo
facility,  the  properties  currently  owned and  occupied in Orem,  Utah become
unnecessary  and are being sold. On May 5, 2000, the Company  finalized the sale
of a portion of these buildings. The remaining buildings are expected to be sold
over the next two years.

FUTURE RESULTS

The  Company's  future  results  of  operations  involve  a number  of risks and
uncertainties.  Among the  factors  that could  cause  actual  results to differ
materially  from  historical  results  are the  following:  changes in  business
conditions and the general economy;  competitive factors such as rival operating
systems,  the Company's  ability to respond and correct  problems with declining
sales  through  channel  distributors,  customer  acceptance of new products and
price pressures; availability of third-party compatible products at below market
prices;  risk of nonpayment of accounts or notes  receivable;  risks  associated
with foreign operations;  risk of product line or inventory  obsolescence due to
shifts  in   technologies   or  market  demand;   timing  of  software   product
introductions;  market fluctuations of investment securities; and litigation. In
addition,  there is no  certainty  that the  changes  the  Company  is making to
address  declining sales and efforts to reduce expenses will result in increased
sales, lower overall expenses or increased profitability in future periods.

Novell believes that it has the product offerings,  facilities,  personnel,  and
competitive and financial  resources for continued business success,  but future
revenues,  costs,  margins,  product  mix, and profits are all  influenced  by a
number of factors,  such as those discussed above, as well as risks described in
detail in the Company's fiscal 1999 report on Form 10-K.



EURO CONVERSION

On January 1, 1999, 11 of the 15 members of the European Union established fixed
conversion rates among their existing sovereign  currencies and adopted the euro
as their common legal  currency.  At the end of a three-year  transition  period
during  which  companies  may choose to operate  either in the euro or  national
currencies the legacy  currencies will be eliminated.  In June 1998, the Company
formed a  cross-functional  team to assess the impact of the  conversion  on the
Company's operations and to address associated issues.

The Company is currently conducting transactions in the euro and expects to have
all affected  information systems fully converted by April 2001. Novell does not
expect the euro conversion to have a material effect on its competitive position
or financial results.




<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to financial market risks,  including changes in interest
rates, foreign currency exchange rates and marketable equity security prices. To
mitigate  these risks,  the Company  utilizes  currency  forward  contracts  and
currency options. The Company does not use derivative financial  instruments for
speculative or trading purposes,  and no derivative  financial  instruments were
outstanding at July 31, 2000.

The primary  objective of the  Company's  investment  activities  is to preserve
principal while maximizing yields without significantly increasing risk. This is
accomplished  by  investing  in  widely  diversified   short-term   investments,
consisting primarily of investment grade securities,  substantially all of which
either  mature  within  the  next  twelve  months  or  have  characteristics  of
short-term investments. A hypothetical 50 basis point increase in interest rates
would result in an approximate  $5 million  decrease  (approximately  1%) in the
fair value of the Company's available-for-sale securities.

The  Company  hedges  currency  risks  of  investments  denominated  in  foreign
currencies with currency  forward  contracts.  Gains and losses on these foreign
currency investments would generally be offset by corresponding losses and gains
on the related hedging instruments,  resulting in negligible net exposure to the
Company. A substantial  majority of the Company's  revenue,  expense and capital
purchasing activities are transacted in U.S. dollars.  However, the Company does
enter into  transactions in other currencies,  primarily  Japanese yen, Canadian
Dollar,  and certain  other Asian and European  currencies.  To protect  against
reductions in value and the volatility of future cash flows caused by changes in
foreign  exchange  rates,  the Company has  established  balance  sheet  hedging
programs.  Currency forward contracts and currency options are utilized in these
hedging  programs.  The Company's  hedging  programs  reduce,  but do not always
entirely eliminate,  the impact of foreign currency exchange rate movements.  If
the Company did not hedge against foreign  currency  exchange rate movement,  an
adverse  change of 10% in  exchange  rates  would  result in a decline in income
before taxes of approximately $10 million.

The Company is exposed to equity  price risks on equity  securities  included in
its  portfolio of  investments  entered  into for the  promotion of business and
strategic  objectives.  These investments are generally in small  capitalization
stocks in the  high-technology  industry sector.  The Company typically does not
attempt to reduce or eliminate its market  exposure on these  securities.  A 10%
adverse  change in equity  prices  would  result in an  approximate  $7  million
decrease in the fair value of the Company's available-for-sale securities.

The Company is also exposed to market risk  related to certain of its  long-term
investments.  These  include  investments  in  start-up  software  and  internet
companies,  long-term  equity  securities and venture capital funds. The Company
typically  does not attempt to reduce or eliminate its market  exposure on these
investments.  If these  investments  were  permanently  impaired,  a 10% adverse
change in the market value of these  investments  could result in an approximate
$19 million decrease in the value of the Company's recorded investments.

All of the  potential  changes  noted  above are based on  sensitivity  analyses
performed on the Company's  financial  position at July 31, 2000. Actual results
may differ materially.



<PAGE>


PART II. OTHER INFORMATION



<PAGE>


Except as listed below, all information  required by items in Part II is omitted
because the items are inapplicable or the answer is negative.

ITEM 1.  LEGAL PROCEEDINGS.

The  information  required by this item is  incorporated  herein by reference to
Footnote E of the Company's financial  statements contained in Part I, Item 1 of
this Form 10-Q.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its Annual  Meeting of  Shareholders  on April 11, 2000 for the
following purposes:

1.  To elect nine directors.
2.  To approve the adoption of the Novell, Inc. 2000 Stock Plan.
3.  To ratify the appointment of Ernst & Young, LLP, as independent auditors for
     Novell, Inc.

The  following  tables set forth the  outcome of the  matters  voted upon at the
meeting and the number of votes cast for, against or withheld.

    Proposal #1
    Election of Directors
                                             Votes For            Votes Withheld
      Eric. E. Schmidt                      293,659,694              2,045,422
      John A. Young                         293,522,735              2,182,381
      Elaine R. Bond                        293,493,148              2,211,968
      Hans-Warner Hector                    293,609,792              2,095,324
      Reed E. Hundt                         293,572,124              2,132,992
      William N. Joy                        293,650,262              2,054,854
      Jack L. Messman                       293,519,313              2,185,803
      Richard L. Nolan                      293,588,508              2,116,608
      Larry W. Sonsini                      254,405,846             41,299,270

    Proposal #2
    To approve the adoption of the Novell, Inc 2000 Stock Plan

    Votes For             Votes Against          Votes Abstained
   193,301,545             100,392,858              2,011,751

    Proposal #3
    To ratify the appointment of Ernst & Young, LLP, as independent auditors for
    Novell, Inc.

    Votes For             Votes Against          Votes Abstained
   293,638,940              1,123,079                944,285




<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits

Exhibit
NUMBER                         DESCRIPTION
  27*                          Financial Data Schedule

(b)  Reports on Form 8-K.

No reports on Form 8-K were filed by the  Registrant  during the  quarter  ended
July 31, 2000.



*Filed herewith.


<PAGE>


                                   SIGNATURES



Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                                  NOVELL, INC.
                                  (Registrant)

<TABLE>
<S>                            <C>                            <C>


Date:  September 13, 2000                                     /S/ DR. ERIC SCHMIDT
                                                              -----------------------------------
                                Dr. Eric Schmidt
                                                              Chairman of the Board and
                                                              Chief Executive Officer
                                                              (Principal Executive Officer)



Date:  September 13, 2000                                     /S/ DENNIS R. RANEY
                                                              -----------------------------------
                                 Dennis R. Raney
                                                              Chief Financial Officer
                                                              (Principal Financial Officer)



Date:  September 13, 2000                                     /S/ RON FOSTER
                                                              -----------------------------------
                                   Ron Foster
                                                              Vice President and Corporate Controller
                                                             (Principal Accounting Officer)
</TABLE>