Hi Jim...About the effect of the strong Dollar on Q3
>>If memory serves me well NOVL gets over 50% of its revenues from overseas.<<
They get 45% to 50% from overseas. The dollar shouldn't have much impact on their results especially with no channel sales. The main problem is that they are losing market share to MSFT, not the strength of the Dollar. In the last couple of days, the company told us the following:
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1. From Post 14682
Asia Pacific vice president,
admitted at the Brainshare Australia conference
yesterday that Novell would continue losing business
to Microsoft [NASDAQ:MSFT] until it could match
Microsoft's awesome marketing machinery.
newsbytes.com
2. From Post 14670
Schmidt said customers will notice marked improvements in upgrades of Novell products that roll out between now and April 1, 1998.
"That is the deadline I've given myself to convince the world Novell is the Internet/intranet company."
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On June 27, 1997, I posted the following
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From post 14205
Using the above optimistic views, we can make some reasonable
projections on what we should expect in the coming quarters. Following
Schmidt's theme of 'survive, thrive, and lead', we may assume:
a. Survive: The revenue stream will stabilize over the coming 3
quarters at the current levels (about 280M/quarter). Yes, we might
lose some more market share to NT in the NOS market but the new
products should make up for the short fall. Further, they kept 20M in
reserve from Q2 revenues to make up for any decrease in revenues.
b. Thrive: By Q2-98 Moab will be released and with the proper
marketing and PR, sales should start growing at about 15% yearly.
Further, by this time we should have a hot product for the low end
market.
c. Lead: By the end of FY-98 we should have all our stuff together and
we should start to grow the business at 20% annually, in the least.
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Noting that April 1, 1998 matches Novell's Q2-98 (2/1/98-4/30/98), the whole picture becomes very clear. They are trying to stabilize revenues at current levels through Q1-98, and grow afterwards. For Q3-97, I'm not worried that much about the magnitude of losses, the most critical item is revenues, if revenues come around 175M, then the business started to stabilize, if lower, then they are in deep troubles.
>>Any vibes on whether the charge may come in bigger then 35 million?<<
My feelings are they should come below 35M, this is about 35K severance package per employee, which seems large to me. Besides, Schmidt missed the pre-announcement of Q2-97 by a mile, and I don't think he wants to mislead Wall Street and investors again.
Regards
Salah
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