Ooohhhh..The plot thickens...(imagine the theme from "Jaws" playing) <g>
August 22, 1997 6:00 PM ET
Novell the day after: It's a rough
road ahead
By Maria Seminerio, ZDNN
In spite of its steep descent from the heights of the
network software market and its worrisome revenue
outlook, it might not be too late for Novell Inc. to make a
comeback, some analysts believe.
But they agreed it's not going to be easy.
A day after Novell's abysmal third-quarter earnings
report, in which the Orem, Utah company revealed a
loss of $122 million, Novell-watchers said that with time
-- provided Wall Street's confidence doesn't entirely
fade -- the company could execute the fundamental
management and marketing changes needed for a
turnaround.
"The channel issue is a big one" for Novell, said Jamie
Lewis, an analyst at The Burton Group, in Salt Lake
City. Company officials blamed part of the third-quarter
loss on charges taken for aggressive moves to clear
inventories, but the inventory problems are a sign of
deeper woes, Lewis said.
"There's not nearly the demand that they need for
NetWare and other key products," he said. Difficulties
with convincing long-term users to upgrade to the latest
version of NetWare and to embrace the Border
Services suite have contributed to the channel backlog,
Lewis added.
"They had previously announced that there would be
inventory problems, but the revenue was clearly weak
no matter how you look at it," said Lee Doyle, an
analyst with International Data Corp. in Framingham,
Mass.
Nonetheless, the earnings bombshell "didn't transform
Novell into a penny stock," said Brian Murphy, an
analyst with The Yankee Group, in Boston. (Novell
shares were trading at $8.25 this afternoon, up from an
opening price of $7.75.) The company's large
installed-base, combined with its well-regarded
NetWare technology, will remain viable assets
regardless of whether Novell reverses its fortunes or
attracts a buyer, Murphy said.
"Is (Microsoft Corp.'s operating system) NT taking the
world by storm? It's still nowhere near the product that
NetWare is in terms of ease of management and
durability," Murphy said.
Should a buyer emerge -- IT giant IBM Corp. has long
been rumored to be a Novell suitor -- that technology
would prove valuable, analysts said. (Murphy cited
Novell CEO Eric Schmidt's former employer, Sun
Microsystems, as another possible buyer.)
But a buyout, while not totally unlikely given the fact that
Novell stock has fallen into the $8 range, still isn't a sure
thing, analysts said.
The company still is likely to benefit from the leadership
skills of Schmidt, who is as well-prepared as anyone
could be to help Novell through the transition, The
Burton Group's Lewis said.
"I wouldn't be surprised if someone buys them at this
point, but then again I don't think Schmidt took this job
just to shepherd the company to an acquisition," Lewis
said. "The $64,000 question is, how big is his window
of opportunity?"
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Regards,
Joe....
Good Stuff, ain't it?
Lessee -- Correct me if I'm wrong, but isn't this the first time that officials from Novell [and now Armonk too] have "declined comment"?
Didn't Eric always vehemently deny any of this stuff (the previous post, and this one) in every other interview? Hmmmm...
As Always:
My account, my time, my opinions. NOBODY elses.... |
