We shouldn’t digress too deeply about NOVL in this thread, and I haven’t contributed to the NOVL threads because I don’t own the stock and therefore don’t follow it closely. It seems to me that NOVL carries too much baggage. They finally figured out they are in the network business, but networking is no longer proprietary. Not only is Windows NT starting to eat their lunch, but even Unix continues to pound at them. Why does the world need yet another network operating system called Netware? It seems to me NOVL made a major blunder by giving Unix away as they disposed of failed client-side software (Word Perfect, Quatro Pro, etc.). If they had held on to Unix, they could have incorporated Netware into Unix and called it the System VI R1 Unix standard. They might have gotten the other Unix vendors to rally around in defense of the Windows NT onslaught.
Nevertheless, NOVL finally sees the light and expects NEST to allow it to reclaim its lock on the world’s networks. Neat vision for Novell, but I don’t think the world is going to play their game. Even if they hit pay dirt in the NEST arena (cars, homes, etc.), it would be years before this would generate much income, and meanwhile their huge base might continue to crumble, making it extremely hard to grow the overall business.
What does this mean for the stock? Due to the enormous size of their legacy business, they probably will have some good quarters in the near term. But on balance, I think Novell has severe problems for which I don’t see a solution. It is not good when your legacy business doesn’t have a reason to be.
Can I be wrong? Might Novell turn around and become a network superstar? Yes, but I wouldn’t bet big on it. Should I short the stock? No, I might be wrong.
The art of stock picking is to never make a major mistake. That means you give up lots of possible gains whenever there is a significant chance you might be wrong, but you never lose money when you pass on an opportunity, you just lose opportunity.
This is all I know about Novell.
Allen, |
