Joe - I keep telling myself that "It's the Management Stupid"....
Joe, there were four areas from management's letter to you which I feel needs further discussion. I guess my overall observation is it is MANAGEMENT AS USUAL. We need a change in the standard operation mode. How about a fresh approach. I truly believe that only new management
can bring this about. The sooner the better.
Item 1: Management's view as to "How to Communicate" with our loyal customer base....
"Some of it is good, some we wish was better, but its all part of a flow from press that Novell values as a central part of how we communicate with customers."
My Observation: If this is the "central part" of their approach our sales growth is not going to get better. Novell has to get out and visit the customers, solve problems, create partnerships and alliances to SELL MORE PRODUCT. Remember a new customer requires more resources than to keep a current customer. Novell needs to grow with their customers and introduce new products and services leveraged from their alliances.
Step one bring in a new VP of Customer Services.
A new management can create a better sales channel to the customer by implementing new and innovative sales, service and technical teams. This could take 8 - 18 months to implement. It is critical this starts soon.
Item 2: I thought CEO Marengi established department heads which report directly to him???
"I have passed your comments to GroupWise product marketing and
the advertising management people at Novell."
Same old story. This should have gone directly to the responsible department head for Marketing or New Products (or whomever) who reports directly to CEO Marengi. You should have been provided a name, e-mail and a date you might expect a response. Sounds like
same old management.
A new management organization (ie.structure) responsive to customer needs (and shareholders) would have your answer and even try to sell you the GroupWise product today!
Item 3: Revenue growth is important but to me profitability is more important. We know the NEW NOVELL is not going to grow like in years past. All we ask for is to maintain our marketshare but be very good at what we do and very profitable. Look, by increasing our margins by 5%-10%, we can reduce our sales by 20% and be just as profitable.
It sounds to me that management may reduce margins in hopes of creating more sales and growth at the expense of profits.
THIS (IMO) IS A CRITICAL MISTAKE! Perhaps a new CEO would re-evaluate this direction.
"Management knows that achieving revenue growth is the issue."
"Novell needs to deliver successive quarterly increases in revenue. There really isn't a substitute for achieving revenue growth over several quarters, and there aren't short cuts to achieving it."
Yes there is "a substitute for achieving revenue growth", make more money (ie. higher margins, reduce SG&A and other expenses) ...Ever heard of downsizing and running a lean and mean operation?
Step One for recovery is to downsize the operation, increase product margins and work on expanding the direct channels to the customer.
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Joe: The more I look at these responses, the more I am convinced that a whole new management team must be brought in to change and rejuvenate the "corporate culture". Novell's management needs to visit the real world and understand "Internet time". I bet you the San Jose office see's things differently. They are here in Silicon Valley where change and innovative approaches are standard. I bet the field office people who visit the customers understand this as well. You have to be flexible and dynamic .
Unfortunately, it looks as though we may see a large one time restructuring expense next year ($0.20 - $0.30 per share) unless our current management begins to re-evaluate their business plan.
EKS |
