Hi Joe..About Management
As I said in a previous post, if they meet their own projections, then they are doing fine, and they did. IMO, the delay in finding a new CEO is related to the sale of the company but they did not get the price they want. Probably, this process is going to go faster if a sale is not in the cards.
On another item, you seem to be disappointed at EPS of $.17. After Q3 results, I remember you said that they should spend more on marketing, and they did, the 19M in extra revenues were spent on marketing and channel promotion. EPS should not be a concern right now. We read the Forrester Research and Aberdeen reports which stated that Novell is going into oblivion. In fact, Forrester report said that their revenues will decline to 1.0B by 1998, and according to this senario, Q4 revenues would have been around 350M. The company main objective is to increase revenues sequentially by about 5%, and earnings will probably increase by about 10% sequentially. For example, if they increase revenues in Q1-97 by about 20M, probably about 10M will go to the bottom line (before taxes) resuling in $.02 in additional net earnings. Let us hope they keep this growth going.
Here is an interesting article about Novell:
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Wednesday, November 27, 1996
AD CAMPAIGN HELPS NOVELL SHAKE OUT OF THE DOLDRUMS
BY LISA CARRICABURU
THE SALT LAKE TRIBUNE
From the article:
He also did not deflect speculation by analysts, including Jon Oltsik of Forrester Research Inc., who question whether Novell may be a takeover target of Netscape Communications Corp. or another emerging high-tech firm.
``Those are fair questions,'' Marengi said. ``We better than anyone understand the value of our company.''.....
David Takata, a software analyst for Gruntal & Co., said Novell's position is improving.
But he added the company still faces challenges as it carves out its intranet niche, searches for a new CEO and seeks to appease employees who have watched an exodus of at least 10 of the company's top executives in the past year.
``I'm taking a wait-see approach,'' Takata said. ``That's all anyone can do.''
sltrib.com
**Comments**
1. About takeover: The more I read about these rumors, I am convinced now that they were approached with a low bid (may be between $14-$16) which they didn't like. Accordingly, they filed the poison pill. However, they are willing to sell at the right price, say $22-$25. Marengi statement ``We better than anyone understand the value of our company.'' confirms this line of thinking.
2. Analysts attitude: Q4 results clearly show improvement, but they are taking a wait-see approach, buy recommendations will come when it becomes apparent that Q4 results are not a blip and the stock probably is trading around $15.
3. Stock Price action: With the company saying "they are not for sale" and the analysts taking a wait-see approach, I expect a narrow trading range for a while but the trend should be generally up.
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Regards
Salah |
