<What kind of rubbish is this? Novell has not to date has a year of loss. Novell is very much alive and doing well!>
This is far from the truth. You have to look past the numbers.
"Economic Profit - the true profit or loss the company has generated (in millions), before intangible goodwill is applied (goodwill is a
meaningless accounting term). Economic profit tells the truth, while accounting profit does not. Novell is a perfect example. Notice
that in 1989, 1994, 1995, and 1996, Novell generated economic losses of $1.7 million, $85 million, $110.5 million and $253 million.
Yet for those very same periods, respectively, they posted positive earnings per share numbers of $0.18, $0.56, $0.90, $0.34. How
is that you say? Well, U.S. accrual accounting rules allow you to play many games with numbers. If you have read the RCM
Valuation Primer, then you have seen some examples. It appears that Novell's management spent much too much time minding
the accountants perception of their performance and not enough time minding that of their true constituency - the Shareholders.
No wonder the shares have performed so miserably. When management operate an organization with earnings per share in mind,
they can easily deter form the goal of value creation for the shareholders. The purpose of Knowledgeware is to take the
information intput, strip it of its incongruities and ambiguities and output true knowledge of the companies financial position."
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