Novell (NOVL) dirt cheap, good buy? Message Board

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

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To: Spartex who wrote (30419)	2/17/2000 10:42:00 PM
From: Paul Fiondella	Read Replies (2) of 42771

I found the Novell conference call was the best I've ever listened to Both Schmidt and Raney were very clear about the companies strategy and its prospects (20% plus growth for 2000). Novell is a net services company. That means that when you want to enhance your network, for example extend your network in any way over the internet, Novell is going to be there with the directory infrastructure and applications to make that possible. Novell is going to be the premier company to turn to through its partners for B2B, corporate multisite VPN, and B2C integration. As I see it Novell is basically an internet technology company with earnings. As was pointed out, Novell sold as many caching servers as Inktomi, but that is only two million dollars worth. Inktomi is valued at astronomical P/Es because it is assumed that this revenue stream will increase over time. Novell has a 25% caching share (the same size as Inktomi) and an OEM model of distribution (meaning it goes through partners like Dell and makes them money by selling Novell software --- whereas Inktomi cuts out CPQ and Dell). Novell just entered this market and is sacrificing some revenue to help its partners. No doubt Novell will have a substantial share of the caching market because all of its partners want to sell computers. But as it stands now this revenue can only be what the caching market amounts to today. So one has to look forward to see the amounts of revenue that make a difference to a company the size of Novell. For Inktomi a few million in profits would be a Godsend. For Novell it is a beginning revenue stream. Raney indicated the superiority of Novell's caching technology over its rivals. During the Superbowl, ABC's website was supported by both Novell and a competitor. The competitors caching system crashed, Novell's didn't. Where competiton prevails the best product will win. Novell has that product. Interestingly although e-directory was introduced in December, it made 6 million out of the gate. E-direcory is per user I believe. Here you see where Novell's netservices strategy predicated on the adoption of directory compatible technologies (eDirectory and ichain) is going to produce tons of money in the future when directories take off. Will directories take off? As Schmidt said --- yes. Microsoft's AD demo is proof of it. Microsoft will help convince everybody that they need one because they see a market here. But if a company needs a directory today, Novell is the only company they can go to for something that works. Because directories must be able to scale and interconnect and only Novell has a real product. Hyping is terrific until somebody says they want to do it and you can't deliver. Novell can deliver. Microsoft can't deliver for years. For some corportions vaporware won't do the job! Novell has put partnerships in place and its consulting services in place to help companies adopt directory technology. ========= These are only some impressions. I think anyone investing in Novell should listen to the call. The company understands what it is doing and has a solid strategy for growth. It is getting better and better at explaining what its strategy is to customers and analysts. The reorg puts Schmidt in charge of new business --- getting the message out to the business community. It puts Nelson in charge of selling solutions (the applications of Novell's technology) to customers to solve their problems. Eric explains the concept. Nelson delivers the software system. This is clearly a company that is going to be at the heart of the internet. Moreover in my opinion any hit that the internet high flyers take is only going to make Novell look much much better. IT has the technology, it has the revenue, it has the cash and it is going to have the market share. It will own the directory market for at leasst the next two years. That is a longtime on internet time.

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