<PAGE>
<TABLE>
<S>
             <C>   
             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, 1997

                                  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.)


                       122 East 1700 South
                        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,  1997 there  were  349,569,231 shares  of  the
registrant's common stock outstanding.
</PAGE>
/TABLE
<PAGE>
<PAGE>

<TABLE>
Part I.  Financial Information, Item 1.  Financial Statements

                                     NOVELL, INC.
                   CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS
<S>                                                    <C>       
<C>     
                                                       Jul. 31,  
Oct. 26, 
Dollars in thousands, except per share data            1997       
   1996  
-----------------------------------------------------------------
-----------------
ASSETS

Current assets
  Cash and short-term investments                     $ 1,055,867 
      $1,024,755 
  Receivables,  less  allowances   
    ($48,288  -  July;  $60,940  - October)                       
             
                                                          177,058 
         452,327 
  Inventories                                              15,668 
          16,837 
  Prepaid expenses                                         61,602 
          59,009 
  Deferred & refundable income taxes                      142,880 
          37,831 
-----------------------------------------------------------------
------------------
Total current assets                                    1,453,075 
       1,590,759 

Property, plant and equipment, net                        386,144 
         394,684 
Other assets                                               48,297 
          64,023 
-----------------------------------------------------------------
------------------
Total assets                                          $ 1,887,516 
      $2,049,466 
=================================================================
==============
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 
  Accounts payable                                   $     64,522 
$         96,933 
  Accrued compensation                                     50,227 
          54,731 
  Accrued marketing liabilities                            28,639 
          48,402 
  Other accrued liabilities                               102,614 
         118,133 
  Income taxes payable                                         -- 
            -- 
  Deferred revenue                                         63,688 
          46,573 
-----------------------------------------------------------------
------------------

Total current liabilities                                 309,690 
         364,772

Minority interests                                         24,311 
          17,035 
Put warrants                                                   -- 
          52,150 

Shareholders' equity
  Common stock, par value $.10 a share
      Authorized - 600,000,000 shares
      Issued -     349,205,124 shares-July          
                   346,059,050 shares-October              34,921 
          34,606 
  Additional paid-in capital                              363,951 
         309,831 
  Retained earnings                                     1,181,190 
       1,266,657 
  Unearned stock compensation                              (7,470) 
        (4,141) 
  Cumulative translation adjustment                          (110) 
         1,183 
  Unrealized gain (loss) on investments                   (18,967) 
         7,373 
-----------------------------------------------------------------
------------------

Total shareholders' equity                              1,553,515 
       1,615,509 
-----------------------------------------------------------------
------------------

Total liabilities and shareholders' equity            $ 1,887,516 
      $2,049,466 
=================================================================
==============

See notes to consolidated unaudited condensed financial statements.
</TABLE>
/PAGE
<PAGE>
                           NOVELL, INC.
    CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

<TABLE>                                                   
                               Fiscal Quarter Ended      Nine
Months Ended   
<S>                              <C>         <C>           <C>    
  <C>   
Amounts in thousands,            Jul. 31,    Jul. 27,      Jul. 31,

Jul. 27,
except per share data              1997        1996          1997 
    1996 
-----------------------------------------------------------------
------------------
Net sales                         $ 90,074    $365,091     
$738,028  $991,190 
Cost of sales                       61,671      75,618      
214,817   240,243 
-----------------------------------------------------------------
------------------
Gross profit                        28,403     289,473      
523,211   750,947 

Operating expenses  
 Sales and marketing                97,769     124,853      
341,727   375,610 
 Product development                69,428      60,345      
209,625   208,701 
 General and administrative         33,711      34,299      
110,959   107,568 
 Restructuring charges              55,335          --       
55,335    18,442 
-----------------------------------------------------------------
------------------
Total operating expenses           256,243     219,497      
717,646   710,321 

Income (loss) from operations     (227,840)     69,976     
(194,435)   40,626 

Other income (expense)
 Investment income                  14,619      15,558       
41,154    41,715 
 Gain on sale of assets                 --          --           
--    19,815 
 Other, net                         (4,736)       (822)     
(11,079)   (5,110)
-----------------------------------------------------------------
------------------
Other income, net                    9,883      14,736       
30,075    56,420 
-----------------------------------------------------------------
------------------
Income (loss) before taxes        (217,957)     84,712     
(164,360)   97,046 
Income taxes                       (96,312)     25,953      
(78,893)   30,085 
-----------------------------------------------------------------
-----------------
Net income (loss)               $ (121,645) $   58,759     $
(85,467) $ 66,961
=================================================================
==============
Weighted average shares 
    outstanding                    349,381     352,129      
348,127   362,052 
=================================================================
==============
Net income (loss) per share        $ (0.35)    $  0.17    $  
(0.25)  $   0.18 
=================================================================
==============

See notes to consolidated unaudited condensed financial statements.
</TABLE>
/PAGE
<PAGE>
<PAGE>                                     NOVELL, INC.
<TABLE>              CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF
CASH FLOWS

                                                             Nine
Months Ended 
<S>                                                          <C>  
     <C>
                                                             Jul.
31,   Jul. 27,
Amounts in thousands                                         1997 
     1996 
-----------------------------------------------------------------
---------------
Cash flows from operating activities

  Net (loss) income                                      $ 
(85,467)   $ 66,961 

Adjustments to reconcile net income to net cash
provided (used) by operating activities
  Depreciation and amortization                              66,582

    77,970 
  Gain on sale of assets                                         --

   (19,815) 
  Stock plans  income tax benefits                            2,970

     9,964 
  Decrease in receivables                                   275,269

    69,460 
  Decrease in inventories                                     1,169

    10,316 
  (Increase) decrease in prepaid expenses                   
(2,593)     18,827 
  (Increase) decrease in deferred & refundable income
taxes(105,661)     11,917 
  (Decrease) in current liabilities, net                   
(55,082)   (127,047) 
-----------------------------------------------------------------
-----------------
Net cash provided by operating activities                    97,187

   118,553 
-----------------------------------------------------------------
-----------------
 Cash flows from financing activities
  Issuance of common stock, net                               9,875

    35,145 
  Repurchases of common stock                                    --
  (455,700) 
  Sale of put warrants                                        2,300

    12,195 
  Settlement of put warrants                               
(20,760)         -- 
-----------------------------------------------------------------
-----------------
Net cash (used) by financing activities                     
(8,585)   (408,360) 
-----------------------------------------------------------------
-----------------
Cash flows from investing activities
  Expenditures for property, plant and equipment           
(53,471)    (77,249) 
  Purchases of short-term investments                   
(1,911,290) (2,437,316) 
  Maturities of short-term investments                    1,425,255

 2,204,944 
  Sales of short-term investments                           465,559

   441,489 
  Proceeds from sale of assets                                   --

    10,750 
  Other                                                      22,321

    (1,925) 
-----------------------------------------------------------------
------------------
Net cash (used) provided by investing activities           
(51,626)    140,693 
-----------------------------------------------------------------
------------------
Total increase (decrease) in cash and cash equivalents      $36,976

 $(149,114)
Cash and cash equivalents - beginning of period             145,521

   312,164 
-----------------------------------------------------------------
-----------------
Cash and cash equivalents - end of period                   182,497

   163,050 
Short-term investments - end of period                      873,370

   830,662 
-----------------------------------------------------------------
----------------
Cash and short-term investments - end of period          $1,055,867

  $993,712 
=================================================================
==============

See notes to consolidated unaudited condensed financial statements.
</TABLE>
/PAGE
<PAGE>
<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 1996  Annual Report  to
  Shareholders.     These  statements   do  include   all  normal
  recurring adjustments which 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.  

  In the first quarter  of fiscal 1997, the Company implemented a
  change to its fiscal year and month  ending dates.  The Company
  will  now recognize  its fiscal year  end on  the last calendar
  day of October, as opposed to prior years on the last  Saturday
  in October.  Likewise,  each fiscal month  end will now end  on
  the last  calendar day of each  month, and  each fiscal quarter
  will have a unique number of  days as opposed to the consistent
  13   weeks  in   prior  years.    The   Company  believes  that
  implementing this change did  not have a material impact on its
  financial position, results of operations, or cash flows.   

B.Significant Events

  In December 1995, Novell  sold its UnixWare product line to the
  Santa  Cruz Operation,  Inc. (SCO).    The  Company realized  a
  small gain and recorded $19 million of  UNIX technology royalty
  revenue  from this  transaction in the first  quarter of fiscal
  1996.   Under the  agreement, Novell  received approximately  6
  million shares of SCO common  stock, resulting in  ownership of
  approximately 17%  of the outstanding  SCO common  stock.   The
  agreement also  calls for  Novell to receive  a revenue  stream
  from  SCO  based  on  revenue  performance   of  the  purchased
  UnixWare product  line.  This revenue  stream is  not to exceed
  $84 million  net present value, and will end  by the year 2002.
  In  addition, Novell  will  continue  to receive  revenue  from
  existing licenses for older versions of UNIX Systems source code.


  In March 1996, the Company  completed the sale of  its personal
  productivity  applications product  line to  Corel  Corporation
  (Corel).  The Company received approximately  10 million shares
  of  Corel common stock  and approximately  $11 million in cash.
  This resulted in an ownership  position of approximately 17% of
  the outstanding  Corel common  stock.  The  Company reported  a
  one-time gain  of $20 million in  the second  quarter of fiscal
  1996 related  to this transaction.   Net  of tax, the  gain was
  $13 million, or $0.04  per share.  Additionally, Corel licensed
  GroupWise   client   software,  Envoy   electronic   publishing
  software,  and other  technologies from  Novell  for a  minimum
  royalty obligation of  approximately $50 million over the  next
  five years.

  During  the  second   quarter  of  fiscal  1996,  the   Company
  implemented a change  to its traditional  distribution stocking
  policy that significantly reduced revenue and  earnings in that
  quarter.  The change in the  Company's traditional distribution
  stocking policy was  to respond to changing market  conditions.
  Over the previous two years, direct customer and  OEM licensing
  programs  had grown from less  than 5% of revenue  to more than
  40% of  revenue.  Such licensing  revenues do  not flow through
  the Company's historical  indirect distribution channel.   This
  change, along  with the evolution that  is taking  place in the
  method of software distribution  to permit eventual  electronic
  distribution  of  products, changes  the Company's  reliance on
  boxed  product   flowing  through   an  indirect   distribution
  channel.  In order  to deal with this changing environment, the
  Company  did not  ship  to  its indirect  distribution  channel
  customers, except  to accommodate product exchanges and returns
  during the second quarter  of fiscal 1996, which had the effect
  of  reducing  inventories   within  the  indirect  distribution
  channel. 

  In  response to  a further decline  in sales  of boxed products
  through the indirect  distribution channel customers and  lower
  licensed  revenue  of   certain  older  products   to  original
  equipment  manufacturers  (OEM s),  as   well  as   competitive
  pressures in the  small network market, Novell took  corrective
  measures during the  third quarter  of fiscal  1997 to  realign
  its  resources and  better  manage  and control  its  business.
  Specifically,  during the  third quarter  of  fiscal 1997,  the
  Company  did not  ship products  to  its indirect  distribution
  channel customers,  except to accommodate product exchanges and
  returns.    Indirect  distribution  channel  inventory  at  the
  already reduced  1996 levels was no  longer appropriate as  the
  Company's   business   continued  to   experience   competitive
  pressures  and  a  continuing  shift  from  reliance  on  boxed
  software distribution to a changing  mix of boxed  products and
  multi-product  licenses.  The   Company  believes  this  action
  brought  indirect  distribution channel  inventories  of  boxed
  software  products  in  line with  current  market demand.   In
  addition,  the Company reduced  its workforce  by approximately
  18%  or   1,000  employees   and  consolidated   a  number   of
  facilities. The decision  to withhold shipments  to the Company's


  indirect distributor  channel resulted in an operating loss in 
  the third fiscal   quarter  of   1997. In addition, a  one-time
  restructuring charge of  $55 million was incurred,  principally
  comprised  of  severance  and excess  facilities  costs.    The
  restructuring  charge  contributed ($0.10)  per  share, net  of
  tax,  to the reported loss in the third quarter of fiscal 1997.

  The  workforce  reduction  and   associated  consolidation   of
  facilities, is  expected to  lower operating  expenses by  $100
  million annually.

C.Cash and Short-term Investments

  All marketable debt and equity  securities are included in cash
  and short-term  investments and  are considered  available-for-
  sale and  carried  at fair  market value,  with the  unrealized
  gains  and  losses,  net  of  tax,  included  in  shareholders 
  equity.    All   equity  securities  included  as  short   term
  investments are investments the Company has  made in technology
  companies or equity securities received by  the Company through
  its dispositions of  certain product  lines to Corel and  Santa
  Cruz  Operation, Inc.  in fiscal  1996.   Municipal  securities
  included in short-term  investments have contractual maturities
  from  1-5 years.    Money  market preferreds  have  contractual
  maturities  of  less  than  90  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, 1997    Gains      
Losses       Jul. 31, 1997
-----------------------------------------------------------------
-------------------------------------  
Cash and cash equivalents                                      
    Cash                              $  94,237       $  --      $ 
 --       $    94,237
    Repurchase agreements                 2,859          --       
  --             2,859
    Taxable money market fund            20,981          --       
  --            20,981
    Municipal securities                 64,420          --       
  --            64,420
-----------------------------------------------------------------
-------------------------------------------
  Cash and cash equivalents         $   182,497       $  --      $ 
 --       $   182,497
-----------------------------------------------------------------
--------------------------------------------
 Short-term investments
   Municipal securities             $   463,103       $ 5,135    $ 
(67)      $   468,171
   Money market mutual funds              6,790            --     
  --             6,790
   Money market preferreds              170,917            --     
 (17)          170,900
   Mutual funds                          95,089            45     
  --            95,134
   Equity securities                    168,353        25,487   
(61,465)         132,375
-----------------------------------------------------------------
----------------------------------------------------------
 Short-term investments             $   904,252      $ 30,667  $
(61,549)     $   873,370
-----------------------------------------------------------------
------------------------------------------------
 Cash and short-term investments     $1,086,749      $ 30,667  $
(61,549)      $1,055,867
-----------------------------------------------------------------
--------------------------------------------------

                                                       Gross      
Gross           Fair
                                      Cost at          Unrealized 
Unrealized      Market Value at
  (Dollars in thousands)              Oct. 26, 1996    Gains      
Losses          Oct. 26, 1996
-----------------------------------------------------------------
---------------------------------------------- 
 Cash and cash equivalents                                      
    Cash                               $  77,374       $  --      
$  --           $  77,374
    Repurchase agreements                  4,526          --      
   --               4,526
    Tax exempt money market fund          36,821          --      
   --              36,821
    Municipal securities                  26,800          --      
   --              26,800
-----------------------------------------------------------------
-----------------------------------------------------------------
---------- 
Cash and cash equivalents             $  145,521       $  --      
$  --          $  145,521
-----------------------------------------------------------------
-----------------------------------------------------------------
  Short-term investments
    Municipal securities              $  376,510       $1,524     
$(12)         $   378,022
    Money market mutual funds             78,514           --     
  --               78,514
    Money market preferreds              224,000           --     
  --              224,000    
    Mutual funds                          14,151           14     
 (10)              14,155
    Equity securities                    174,054       35,432  
(24,943)             184,543
-----------------------------------------------------------------
-----------------------------------------------------------------
------
  Short-term investments              $  867,229      $36,970 $
(24,965)         $   879,234
-----------------------------------------------------------------
-----------------------------------------------------------------
---------
  Cash and short-term investments     $1,012,750      $36,970  $
(24,965)         $1,024,755
-----------------------------------------------------------------
--------------------------------------------------------------
</TABLE>
    During the first nine months of fiscal 1997 the Company had
realized gains
    of $8 million on the sale of securities compared to realized
gains of 
    $8 million in the first nine months of fiscal 1996.

D.  Income Taxes

    The Company's estimated effective tax rate  for the first  nine
    months of fiscal 1997 was 48.0% compared to 31.0%  in the first
    nine months of fiscal 1996.  The Company paid cash  amounts for
    income taxes  of $9 million and $15  million, in the first nine
    months of fiscal 1997 and 1996, respectively.
E.  Commitments and Contingencies

    The Company  currently has  a $10  million unsecured  revolving
    bank line  of credit,  with interest  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,  1997  there  were no
    borrows,  letter of  credit  acceptances or  commitments  under
    such line.

    The Company has an additional $5  million credit facility  with
    another bank which is not subject to a loan agreement. At  July
    31,  1997 standby letters  of credit  of approximately $300,000
    were outstanding under this agreement.

    In August 1997, the  Company entered into an agreement to lease
    5 buildings being constructed on  land owned by the  Company in
    San  Jose,  California.    The  lessor  of  the  building   has
    committed to  fund up to $157  million for  construction of the
    buildings,  with the portion  of the  committed amount actually
    utilized to  be determined  by the Company.   Rent  obligations
    for the buildings will  commence upon the  Company's occupation
    of the  buildings  in fiscal  1999.   The Company  may, at  its
    option, purchase the buildings  during the term of the lease at
    approximately  the amount expended  by the  lessor to construct
    and improve  the buildings.  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  as
    determined  at the  inception of the  lease.   In addition, the
    agreement requires 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 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.  Put Warrants                   

    In the  first nine months of fiscal 1997,  the Company sold put
    warrants  on  2 million  shares  of  its  common  stock for  $2
    million, callable  on specific  dates in the  third quarter  of
    fiscal 1997, giving  a third party the right  to sell shares of
    Novell common stock to  the Company at  contractually specified
    prices.   The put warrant liability  is the  amount the Company
    would be obligated to pay  if all the outstanding  put warrants
    were exercised at the  strike price without a cash settlement. 
    In the  first nine  months of  fiscal 1997, the Company settled
    all of  its remaining  put  warrant  obligations on  6  million
    shares for cash of $21  million and therefore reversed  the put
    warrant obligation  back to additional paid-in capital.  During
    the first  nine months  of fiscal  1996, the  Company sold  put
    warrants on  9  million shares  of  its  common stock  for  $12
    million,  callable on specific  dates in  the third  and fourth
    quarters of  fiscal 1996 and the  first and  second quarters of
    fiscal 1997.  During the first  nine months of fiscal 1996, put
    warrant obligations on  2 million  shares expired with no  cash
    settlement required.  

G.  International Sales 

    The Company  markets internationally both directly to end users
    and  through distributors who  sell to  dealers and  end users.
    For the  nine months  ended July  31, 1997  and July 27,  1996,
    sales  to  international   customers  were  approximately  $330
    million  and $498  million,  respectively.   In the  first nine
    months  of   fiscal  1997  and   fiscal  1996,   53%  and  54%,
    respectively,   of  international   sales   were   to  European
    countries.  Except for  Japan, which accounted for 14% of total
    sales  in the  third  quarter of  fiscal  1997, no  one foreign
    country  accounted  for 10%  or  more  of  total  sales in  any
    period. No customer accounted for  more than 10% of  revenue in
    any period.
H.  Net Income (Loss) Per Share

    Net income (loss) per share is computed using the weighted
    average  number  of   common  shares  outstanding   during  the
    periods,    including   common    stock   equivalents   (unless
    antidilutive).      Common   stock   equivalents   consist   of
    outstanding stock options.

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations


Introduction    

Novell  is  the world s  leading  network software  provider.   The
Company offers  a wide range  of network solutions  for distributed
network, Internet, intranet and small-business markets. 

In  December 1995,  Novell sold  its UnixWare  product line  to the
Santa Cruz Operation,  Inc. (SCO).   The Company  realized a  small
gain and recorded  $19 million of  UNIX technology royalty  revenue
from  this transaction in the first quarter  of fiscal 1996.  Under
the agreement,  Novell received  approximately 6 million  shares of
SCO common stock,  resulting in ownership  of approximately 17%  of
the outstanding SCO  common stock.   The agreement  also calls  for
Novell  to receive  a  revenue stream  from  SCO based  on  revenue
performance of  the purchased UnixWare product line.   This revenue
stream is not to exceed $84 million net present value, and will end
by the year  2002.  In  addition, Novell  will continue to  receive
revenue from existing licenses  for older versions of  UNIX Systems
source code.

In  March  1996, the  Company completed  the  sale of  its personal
productivity  applications   product  line  to   Corel  Corporation
(Corel).  The Company received  approximately 10 million shares  of
Corel common stock  and approximately  $11 million in  cash.   This
resulted  in an  ownership  position of  approximately  17% of  the
outstanding Corel  common stock.   The Company reported  a one-time
gain of $20 million in the second quarter of fiscal 1996 related to
this transaction.   Net of tax, the gain was  $13 million, or $0.04
per share.  Additionally, Corel licensed GroupWise client software,
Envoy electronic publishing software,  and other technologies  from
Novell  for  a  minimum  royalty obligation  of  approximately  $50
million over the next five years.

During the second quarter of fiscal 1996, the Company implemented
a
change   to  its  traditional  distribution  stocking  policy  that
significantly reduced revenue  and earnings in  that quarter.   The
change in  the Company's  traditional distribution stocking  policy
was to  respond to changing market  conditions.  Over the  past two
years,  direct customer and OEM  licensing programs have grown from
less  than  5% of  revenue  to  more than  40%  of  revenue.   Such
licensing  revenues do  not flow  through the  Company's historical
indirect  distribution  channel.    This  change,  along  with  the
evolution  that  is  taking   place  in  the  method  of   software
distribution to permit eventual electronic distribution of products
changes the Company's reliance on boxed  product flowing through an
indirect distribution channel.  In order to deal with this changing
environment, the Company did not ship to its indirect  distribution
channel  customers, except  to  accommodate product  exchanges  and
returns  during the  second quarter of fiscal  1996, which had  the
effect of  reducing inventories  within  the indirect  distribution
channel.

In response to a further decline in sales of boxed products through
the  indirect distribution  channel  customers  and lower  licensed
revenue   of  certain   older   products  to   original   equipment
manufacturers (OEM s) as well as competitive pressures in the small
network market,  Novell took  corrective measures during  the third
quarter of fiscal 1997  to realign its resources and  better manage
and control its business.   Specifically, the Company did  not ship
products to its indirect  distribution channel customers, except to
accommodate product  exchanges and returns.   Indirect distribution
channel  inventory at the already reduced 1996 levels was no longer
appropriate  as  the  Company's business  continued  to  experience
competitive pressures and a continuing shift from reliance on boxed
software  distribution  to a  changing  mix of  boxed  products and
multi-product licenses.  The Company  believes this action  brought
indirect   distribution  channel  inventories   of  boxed  software
products  in line  with current  market demand.   In  addition, the
Company  reduced  its  workforce  by  approximately  18%  or  1,000
employees and consolidated a number of facilities.  The decision to
withhold  shipments to  the Company's indirect  distributor channel
resulted in an operating loss in  the third fiscal quarter of 1997.
In  addition,  a one-time  restructuring charge of  $55 million was
incurred, principally comprised of severance and  excess facilities
costs.  The restructuring charge contributed ($0.10) per share, net
of tax, to the reported  loss in the third quarter of  fiscal 1997.
The workforce reduction and associated consolidation of facilities,
is expected to lower operating expenses by $100 million annually.

Results of Operations
<TABLE>
Net Sales
<S>                  <C>   <C>       <C>       <C>    <C>     <C> 
                       Q3             Q3        YTD             YTD
                     1997  Change    1996      1997    Change  1996
-----------------------------------------------------------------
----------
Net sales (millions)  $90  -75%     $365       $738    -26%    $991
=================================================================
===========
</TABLE>
Novell s  third quarter  of fiscal  1997  revenue was  reduced from
recent periods  primarily due to the  indirect distribution channel
actions  described above,  which the  Company took  in response  to
changing market conditions.   Third quarter revenue was principally
from  sales  to large  network  users through  the  Company's major
account, corporate and volume license programs.  Additionally, none
of the $188 million of revenue in the second quarter of fiscal 1996
came from the indirect  distribution channel.  The decision  to not
ship to the indirect distribution channel in both the third quarter
of fiscal 1997 and the second  quarter of fiscal 1996 makes quarter
over quarter and year over years comparisons difficult.  

Novell s  product lines  can be  categorized into  server operating
environments;  network  services;  UNIX royalties;  and  education,
service and other.   While  revenue decreased from  both the  third
quarter of 1996  to the third  quarter of 1997  and the first  nine
months of fiscal 1996 to the first nine months of 1997, analysis of
the individual  product categories  characterizes the changes  that
have occurred. 

Server  operating environments  revenues decreased  by 82%  or $177
million in the third quarter of 1997  compared to the third quarter
of 1996.   Both the  IntranetWare product family and  the NetWare
3
product  family  revenue  decreased  significantly as  the  Company
withheld  shipments to  its  indirect distribution  channel in  the
third quarter of  fiscal 1997.  In the first  nine months of fiscal
1997, server  operating environments  revenues decreased by  10% or
$50  million over the same period in  fiscal 1996.  While NetWare
3
product  family  revenue  decreased by  $97  million,  IntranetWare
product family  revenues grew by  $47 million or  16% in the  first
nine months  of fiscal  1997 compared to  the first nine  months of
fiscal 1996.

Network  services revenues decreased by  74% or $68  million in the
third quarter of  1997 compared to the third quarter  of 1996.  The
decrease  encompassed all  product  lines as  the Company  withheld
shipments to its indirect distribution channel in the third quarter
of fiscal 1997.   In the first nine months  of fiscal 1997, network
services revenues decreased  by 29%  or $68 million  over the  same
period in fiscal 1996.  The decrease encompassed all product lines.

UNIX  royalties revenue decreased 59%  or $10 million  in the third
quarter of 1997 compared to the third quarter of 1996. In the first
nine months  of fiscal 1997,  UNIX royalties revenues  decreased by
61% or $41 million over the same period in fiscal 1996.

Education, service and  other revenues decreased by  $19 million or
49% in the third quarter  of 1997 compared to the third  quarter of
1996.  The decrease was a result of lower revenues  in both service
related and training revenue  as the Company withheld shipments  to
its indirect  distribution channel in  the third quarter  of fiscal
1997.   In the first nine months of fiscal 1997, education, service
and other revenues  decreased by 26% or  $31 million over  the same
period in fiscal 1996. 

International sales  represented 45%  of total  sales in  the first
nine  months of 1997  compared to 50%  in the first  nine months of
1996.   This change  is  a result  of a  17%  decrease in  domestic
revenues compared  to a 34%  decrease in international  revenues in
the first  nine months of  fiscal 1997  compared to the  first nine
months of fiscal 1996.
<TABLE>
Gross Profit
<S>                          <C>  <C>          <C>     <C>      <C>

    <C>        
                             Q3                Q3      YTD        
       YTD   
                             1997 Change       1996    1997    
Change    1996   
-----------------------------------------------------------------
-----------------
Gross profit (millions)       $28  -90%     $289      $523     -30%

    $751 
Percentage of net sales        31%            79%       71%       
        76%
=================================================================
=====================
</TABLE>
The  gross  margin percentage  decreased  in the  third  quarter of
fiscal 1997 compared to the third quarter of fiscal 1996 and in the
first nine months of fiscal 1997 compared to the  first nine months
of fiscal 1996 due  to the fixed portion  of cost of sales being 
a
higher percentage of  the lower  revenues in the  third quarter  of
fiscal  1997 as  the  Company withheld  shipments  to its  indirect
distribution channel in the third quarter of fiscal 1997.   
<TABLE>
Operating Expenses
<S>                                      <C>   <C>      <C>      
<C>   <C>      <C>
                                          Q3             Q3      
YTD            YTD   
                                         1997  Change   1996    
1997   Change   1996   
-----------------------------------------------------------------
--------------------------------
Sales and marketing (millions)          $ 98    -22%    $125    
$342     -9%    $376   
Percentage of net sales                  109%            34%     
46%            38%
-----------------------------------------------------------------
---------------------------------
Product development (millions)          $ 69     15%    $ 60    
$210      --    $209   
Percentage of net sales                   77%            16%     
28%            21%
-----------------------------------------------------------------
---------------------------------
General and administrative (millions)   $ 34            $ 34    
$111      3%    $108   
Percentage of net sales                   38%     --      9%     
15%            11%
-----------------------------------------------------------------
---------------------------------
Restructuring charges (millions)        $ 55      --      --     
$55    205%    $18
Percentage of net sales                   61%             --      
7%             2%
-----------------------------------------------------------------
---------------------------------
Total operating expenses (millions)     $ 256     17%    $219   
$718      1%    $710   
Percentage of net sales                   284%             60%    
97%            72%
=================================================================
=================================
</TABLE>
Sales and marketing expenses increased as a percentage of net sales
in both  the third  quarter of  fiscal 1997  compared to  the third
quarter  of fiscal  1996 as  well as  in the  first nine  months of
fiscal 1997 compared to the first nine months of fiscal 1996 as the
Company withheld shipments to  its indirect distribution channel in
the third quarter of fiscal 1997.  The decrease in absolute dollars
is attributable to lower  domestic sales expenses as well  as lower
corporate  and product  marketing  expenses.   Sales and  marketing
expenses fluctuate as a percentage of net sales in any given period
due  to product  promotions,  advertising  or  other  discretionary
expenses.

Product development expenses increased as a percentage of net sales
in the third quarter of  fiscal 1997 compared to the third  quarter
of fiscal  1996 as well as in the first  nine months of fiscal 1997
compared to  the first nine  months of fiscal  1996 as the  Company
withheld  shipments to  its  indirect distribution  channel in  the
third  quarter  of fiscal  1997.      Product development  expenses
increased in absolute dollars  in the third quarter of  fiscal 1997
compared to the third  quarter of fiscal 1996 while  remaining flat
in  absolute  dollars  in the  first  nine  months  of fiscal  1997
compared to the first nine months of fiscal 1996.

General and  administrative expenses  increased as a  percentage of
net sales in the third quarter of fiscal 1997 compared to the third
quarter  of fiscal 1996, while remaining  flat in absolute dollars.
General and administrative  expenses increased  as a  percentage of
net  sales while  increasing slightly  in absolute  dollars  in the
first nine months of fiscal 1997  compared to the first nine months
of fiscal 1996.  

During  the third quarter of  fiscal 1997 the  Company incurred $55
million  of  tax  deductible  restructuring charges  for  redundant
facilities  and  excess  personnel  as the  Company  realigned  its
resources  to better manage and  control its business.   During the
first  quarter of fiscal 1996  the Company incurred  $18 million of
tax deductible  restructuring charges for  redundant facilities and
excess  personnel as  the  Company prepared  for  the sale  of  its
personal productivity applications product line.  

Overall, operating expenses,  excluding nonrecurring charges,  have
declined as revenues  have decreased in both the  third  quarter of
fiscal 1997 compared to the third quarter of fiscal 1996 as well as
in the first nine months of fiscal 1997 compared to  the first nine
months of fiscal 1996.  
<TABLE>  
<S>                                           <C>            <C>  
           <C> 
                                                YTD               
           YTD
                                               1997          Change

         1996
-----------------------------------------------------------------
---------------------------
Employees                                     4,831           -16% 
          5,737
Annualized revenue per employee (000's)        $184            -7% 
           $198
=================================================================
=============================
</TABLE>
In  the third  quarter  of fiscal  1997,  the Company  reduced  its
employment  by  approximately   1,000  employees  as  the   Company
realigned its resources to better  manage and control its business.
In  fiscal  1996,  the  Company  reduced its  employment  by  1,725
employees  as the Company completed  the sale of  it s UnixWare and
personal productivity applications product lines and terminated  or
transitioned   former  UnixWare  and  personal  productivity  group
employees to Corel, SCO, and other third parties.  

Other Income (Expense)
<TABLE>
<S>                                     <C>     <C>      <C>      
<C>     <C>        <C>  
                                        Q3                Q3      
YTD                YTD  
                                        1997    Change    1996    
1997    Change    1996   
-----------------------------------------------------------------
-----------------------------------------
Other income (expense), net (millions)  $10      -33%      $15    
$30     -46%       $56   
Percentage of net sales                  11%       --       4%    
 4%                 6%
=================================================================
=====================================
</TABLE>
The  primary  component of  other  income  (expense) is  investment
income, which was $15  million in the third quarter  of fiscal 1997
compared to $16 million in the third quarter of fiscal 1996 and was
$41 million in the first nine months of fiscal 1997 compared to $42
million in the  first nine  months of  fiscal 1996.   The  relative
flatness  is the result of  higher average yields  on lower average
cash balances.  In  order to achieve potentially higher  returns,
a
limited portion  of the Company's investment  portfolio is invested
in mutual funds which incur some 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.


Also included in  other income (expenses),  the Company recorded 
a
gain  of $20  million  on the  sale  of its  personal  productivity
applications product line in the second quarter of fiscal 1996.
<TABLE>
Income Taxes
<S>                             <C>       <C>       <C>     <C>   
   <C>      <C>
                                 Q3                  Q3       YTD 
            YTD   
                                1997      Change    1996     1997 
   Change   1996   
-----------------------------------------------------------------
----------------------------------------
Income taxes (millions)         $(96)      -469%     $26    $ (79) 
  -363%     $30   
Percentage of net sales         -106%                 7%      -11% 
             3%
Effective tax rate                44%                31%       48% 
            31%
=================================================================
=======================================
</TABLE>
The effective tax rate increased from 31% in fiscal 1996  to 48% in
fiscal 1997 due to the loss from operations in fiscal 1997.

<TABLE>
Net Income (Loss) and Net Income (Loss) Per Share
<S>                               <C>      <C>       <C>       <C> 
  <C>      <C>
                                  Q3                 Q3        YTD 
           YTD   
                                  1997     Change    1996      1997

 Change    1996   
-----------------------------------------------------------------
-----------------------------------
Net income (loss) (millions)      $(122)    -307%    $59      
$(85)   -227%    $67   
Percentage of net sales           -136%               16%      
-12%              7%
Net income (loss) per share       $(.35)    -306%    $  .17   
$(.25)  -239%    $.18   
=================================================================
====================================
</TABLE>

Liquidity and Capital Resources      
<TABLE>
<S>                                           <C>            <C>  
    <C>  
                                               Q3                 
    Q4   
                                               1997          Change

  1996   
-----------------------------------------------------------------
---------------------------------------
Cash and short-term investments (millions)    $1,056          3%  
   $1,025   
Percentage of total assets                       56%              
       50
=================================================================
=======================================
</TABLE>
Cash and short-term investments increased to $1,056 million at July
31, 1997 from $1,025 million at October 26, 1996.  The major reason
for  this  increase  was  the  $97  million provided  by  operating
activities,  offset primarily by the  $53 million of  cash used for
expenditures on property, plant  and equipment, and the $9  million
used  by  financing  activities.    The  investment  portfolio   is
diversified among security  types, industry groups,  and individual
issuers.  The Company's principal source of liquidity has been from
operations.   At  July 31,  1997,  the Company's  principal  unused
sources of  liquidity consisted of cash  and short-term investments
and available borrowing capacity of approximately $15 million under
its  credit   facilities.    The  Company's   liquidity  needs  are
principally  for the  Company's financing  of accounts  receivable,
capital assets,  strategic investments and flexibility in a dynamic
and competitive operating environment.

During  the first nine months of 1997, the Company has 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.   Borrows
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 1997 are anticipated to be approximately $60
million, down from  the original  estimate of $80  million, as  the
Company experienced  less  than previously  estimated  growth,  and
could be  further reduced if the growth of the Company is less than
presently anticipated. 

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: business conditions and the general economy; competitive
factors,  such  as  rival  operating  systems,  acceptance  of  new
products   and   price  pressures;   availability   of  third-party
compatible  products at  reasonable prices;  risk of  nonpayment of
accounts  or   notes  receivable;  risks  associated  with  foreign
operations;  risk  of  inventory  obsolescence  due  to  shifts  in
technologies  or   market  demand;   timing  of   software  product
introductions; and litigation.

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, as discussed
above. 



Part II. Other Information

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 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, 1997.
                            
        *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)



Date: September 11, 1997             /s/ Dr. Eric Schmidt
                                     Dr. Eric Schmidt
                                     Chairman of the Board and 
                                     Chief Executive Officer
                                     (Principal Executive Officer)



Date: September 11, 1997             /s/ James R. Tolonen
                                     James R. Tolonen
                                     Senior Vice President and 
                                     Chief Financial Officer 
                                     (Principal Financial and
Accounting Officer)