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Technology Stocks : Novell (NOVL) dirt cheap, good buy?
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To: Loring who wrote (28459)10/5/1999 10:56:00 PM
From: Paul Fiondella  Read Replies (2) of 42771
 
Novell buybacks

The best source for information on the company doing its buybacks is the Edgar site and reading the details of the reports.

We have been over this topic before.

Novell doesn't trade its stock. What I saw them do in two of the authorized buybacks was sell puts. In such transactions they buy the stock back from the buyer of the puts. That lessens the stock in the market. At the same time they are issuing stock to executives and employees and creating new shares. These employees are exercising those options and selling the stock, thus adding to the stock in the market.

The effect of Novell's stock buyback has been to neutralize the number of outstanding shares that would otherwise balloon with the options being exercised. If the company can do this and maintain capital then this is good. If on the other hand the company spends down the billion in cash available for acquisitions or investments in order to reward its management then it is bad.

In any case a number of these options have gone to senior management. These senior managers have been amply rewarded, including all of the departing managers. When viewed in the light of Novell's profits, the dollars involved in these option grants have been considerable!
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