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Technology Stocks : Novell (NOVL) dirt cheap, good buy?

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To: Joe Antol who wrote (3980)9/30/1996 8:38:00 PM
From: Joe Antol   of 42771
 
Speaking the LANguage: 9/30: Getting Novell back on its feet is
no mission impossible

Network World, 9/30 edition


Mission: Impossible - blockbuster summer movie or a way of life at Novell, Inc.?

It's interesting that Novell chose ''Mission Impossible'' as the theme for its recent rollout of
GroupWise 5. I'm sure the company was just trying to capitalize on the movie's popularity,
but the phrase does seem to apply to Novell's recent attempts to pull itself out of a
tailspin.

Novell has been losing key players for some time, but Bob Frankenberg's departure last
month really caused a stir. If you believe some Novell critics, Frankenberg's resignation is
the final crack in the dam, and all hell will now break loose.

Quite frankly, I don't see it that way. Yes, Novell has taken a slide over the past year.
Top-level people have left - including Sheldon Laube, Novell's chief technical officer and,
just two weeks ago, General Manager Steve Markman- overall sales have slipped a bit,
profits are down and even NetWare's market share is on the wane. But that doesn't mean
it's time to throw out your Novell products in favor of making Bill Gates even richer than he
already is. There's still a lot of life left in Novell.

Frankenberg's departure is just what the company needed. He did a great job of sorting
out the mess Ray Noorda left behind and getting the company to refocus on networking,
its core competency. (Novell had no business being in the word processing market or
worrying about how to connect your copying machine to the corporate network.)

However, now that Novell has completed its downsizing, it's time for the company to find a
more charismatic leader, one that can fire up the troops and regain customer confidence.

I don't have the inside track on who will be Novell's next CEO. The search will probably
take a while, though, as there aren't many candidates who could (or would want to) fill the
job.

In the meantime, the company is in good hands with John Young as chairman and Joseph
Marengi as president. Both have the fortitude to pull Novell out of its doldrums.

Novell has very good products and technology. What it lacks is the ability to offer a
strategic vision of where that technology fits into the corporate enterprise, as well as the
ability to market its products. As one of my friends at Novell readily admits, the firm has
always had a ''build it and they will come'' attitude. The problem is, great technology won't
get you anywhere if nobody knows about it.

That ought to change under Marengi's leadership. As Novell's former executive vice
president of worldwide sales, he knows how to sell the products and he understands the
distribution channel, where most sales occur. But for Novell's sake, I hope he knows how
to reach out to the corporate customer, specifically the chief information officer

Novell needs to reach out to its own business partners, too. Server vendors such as
Compaq Computer Corp., Hewlett-Packard Co., Digital Equipment Corp. and even Dell
Computer Corp. are pairing up with Microsoft Corp. in the server wars, partly because
Novell has had difficulty proving to those companies that its solutions can play to the
enterprise, as well.

I don't want to oversimplify the problems that Novell has had over the past few years.
These problems are difficult and diverse, as are their causes. But perhaps the biggest
crisis that faces the company right now is its failure to gain the confidence of corporate
America. Oh, sure, the CIOs trust Novell to provide their file and print services, and maybe
even corporatewide directory services. But Novell has never gained the status of an
enterprise application platform, and that's where Microsoft is striking hard and fast.

Many companies are adopting Windows NT for its strength as an application server and
are deciding to use NT Server as the network operating system (NOS) in order to simplify
service and support.

Even though today's version of NT Server may not be as robust a NOS as NetWare 4.X,
CIOs view it as an enterprise platform and buy into the vision and strategy that Microsoft
has painted.

Novell, unfortunately, has not provided such a road map. How could it when the road kept
changing?

Frankenberg deserves credit for refocusing Novell on its core products - NetWare,
GroupWise, ManageWise and the soon-to-be-released IntranetWare. It's too soon to tell
how IntranetWare will help establish Novell's position in the Internet arena.

However, NetWare, with its superior directory services, remains the premier NOS for PC
networks. The newly released GroupWise 5 is groupware for the rest of us - that is, those
of us who don't want or can't afford Lotus Notes.

ManageWise is also gaining strength in the network management market.

Novell's products are just plain good, and technical people know it. Unfortunately, CIOs
spend too much time listening to Microsoft-speak. If you are a network manager and this
scenario sounds familiar to you, why not invite your Novell sales representative in to meet
your CIO? Let him see that Novell isn't just an also-ran.

But you better wait a few weeks, until Novell gets its new leadership team fully in place
and figures out what its vision should be. Otherwise, you'll get another disjointed sales
call, after which convincing your management to stay the course with Novell really will be
a Mission Impossible.
====================================================================

Joe...
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