Novell will announce next week that it is firing 20% of its workforce at the same time it reports its quarterly earnings. In addition to the layoffs, the company is expected to drop some research and development projects in an effort to focus on its key products such as NetWare and GroupWise.

"This is not limited to one or two departments; it's a top-to-bottom reorganization," a source close to the company said. "Anyone who is viewed as not contributing to their new direction is likely to be let go."

Novell already warned investors in April that the quarterly results would drop almost 50% from last year. Novell's new CEO, Eric Schmidt, took over in March