Linux distributor Novell has published the financial results of its second fiscal quarter of 2010. Compared to the second quarter of 2009, net revenue fell slightly from $216 million to $204 million

Novell Wednesday reported the net income loss for the third quarter of its 2007 fiscal year fell by nearly 50% compared to the same quarter last year, and the company said revenue was up nearly 3% to $243 million.

Novell beat Wall Street's estimates with a solid third quarter, but the real story is in its continued Linux growth. Net revenue rose to $245 million from $237 million in 2007, but Novell's third-quarter loss quadrupled to $15.1 million from $3.7 million in 2007.

Novell's Linux business is keeping the company buoyant in trying economic times, the company's third-quarter earnings indicate. On Thursday, the software maker published its third-quarter results, which revealed that revenue from its Linux platform products had increased 22 percent, year-on-year, to US$38 million.

Red Hat continues to demonstrate its dominance of the enterprise Linux market. The company reported a blow-out third quarter, with total revenue of $135.4 million, an increase of 28% from the year ago quarter and 6% from the prior quarter. Subscription revenue was $115.7 million, up 30% year-over-year and 6% sequentially.

Novell made some, but not a lot of money from Linux in its second fiscal quarter, which ended April 30, 2008. The real news though isn’t the Linux income itself–$29-million–it’s that Novell year-over-year growth in Linux is up a healthy 31%.

Novell's recently released figures for the second quarter of 2009 showed an 8.5 per cent drop in sales compared to the previous year – not a big surprise in light of the much debated economic crisis. However, one area of the business has enjoyed constant, indeed double-digit, growth over the last few years – Linux.

So far, so good for Novell. For its first-quarter 2008 results, Novell reported growing income and revenues with a strong year-over-year showing from its Linux platform business. With Microsoft's Windows Server 2008 set to enter the market, Novell's CEO is optimistic that the company can continue to grow its business even further.

Yes, Novell has a ways to go to catch up with Red Hat, but with yet another strong quarter it's becoming increasingly clear that the enterprise Linux market is a two-horse race again. Importantly, Novell is competing much more strongly without backup from Microsoft.