Hi Jerry. Right, you get dinner *and* a floor show here <G>. Funny, you should ask about "core products" and "the Internet". Well, have I got a "timely" article for you <s>.
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(THIS IS An 8/25/97 ARTICLE Jerry)
Users to Novell CEO: Focus on Products
from: nwfusion.com
Orem, Utah - Upon joining Novell, Inc. as its CEO in April, Eric Schmidt pledged to
make the company an intranet/Internet industry leader within one year. But you would
be hard pressed to find anyone outside the company who believes he has driven
Novell even halfway to that goal.
Some customers and business partners said they sense a renewed enthusiasm and
commitment to better service under Schmidt's leadership. However, many analysts and
customers are withholding praise until Schmidt gets the company to deliver what really
matters to Novell's bottom line: products that give customers good reason to turn
down Windows NT.
Schmidt has spent much of the past six months at industry trade shows talking up
Novell's 'Net services campaign, which revolves around cross-platform technologies
such as Novell Directory Services. He's also taken to the road at a frantic pace to
touch base with as many major customers as possible.
But customers are still skeptical because they have heard so much lip service from
Novell executives in the past. ''I really don't care what he has to say. I just want him to
show me the products,'' said Scott Sattler, senior network analyst with Cargill, Inc. in
Minneapolis, which operates more than 700 Novell servers worldwide.
Cargill is looking to roll out 200 more servers but seriously is considering NT Server
because Novell has failed to deliver a native TCP/IP version of its operating system,
Sattler said. ''[Novell is] playing the Internet game, but they still don't have a good,
cutting-edge operating system to help them get there,'' he said.
Schmidt has spent much of the past six months at industry trade shows talking up
Novells Net services campaign, which re-volves around cross-platform technologies
such as Novell Directory Services (NDS).
He also has taken to the road at a frantic pace to touch base with as many major
customers as possible. But customers still are skeptical because they have heard so
much lip service from Novell executives in the past.
Schmidt was unavailable for comment, but a spokesman said the CEO is keenly
focused on keeping product promises. First, however, Schmidt has tried to get the
company's finances in order. He has flattened the corporate structure by weeding out
40% of middle management, laying off 20% of the workforce and clearing the channel
of excess inventory.
These moves have registered short-term hits to Novell's bottom line. The company last
week reported a net loss of $122 million and revenue of $90 million for its third
quarter. But the moves also put Novell in a position for better long-term gains, said
Mary McCaffrey, a financial analyst with Alex. Brown and Sons, Inc. in New York.
''But the only true judgement of Schmidt's efforts will be the products that get rolled out
under his guidance, she said. Using that gauge, Schmidt gets points for getting
BorderManager, Novell's new suite of proxy-caching, firewall and virtual private
networking services, out the door on time. That product officially hits the streets today.
''They're on the right track with this one because it lets you evolve what you have in
IntranetWare and NDS into a new way of computing using the Internet,'' said Phil
Easter, technology strategist with Greyhound Lines, Inc. in Dallas.
What about NDS?
But Schmidt loses points on an equally strategic product - a version of NDS
that runs natively on NT - that was supposed to be available by the end of this
month. The product release has slipped, and now the software will not be
available until fall. The delay is due to the addition of new management features
that were not planned for the initial release, Novell officials said.
''There is no reason that Novell shouldn't have shipped this product a year ago,'' said
Neil MacDonald, an analyst with Stamford, Conn.-based Gartner Group, Inc. He
noted that Banyan Systems, Inc. shipped its StreetTalk directory service on NT over a
year ago.
The true test of Schmidt's product delivery prowess will come if he can get the
company to ship Moab, the next release of the operating system that swaps out
Novell's proprietary IPX transport protocol in favor of industry-standard IP. Novell
has been promising native IP support for two years; the ship date most recently was
pushed back to early 1998.
Customers seem confident that Schmidt can get Novell to deliver this time around.
''He's taken a hard line on the switch to TCP/IP as a native protocol, and I think that's
one of the most significant direction changes,'' said David Druker, a senior systems
analyst at the University of Utah Hospitals & Clinics in Salt Lake City.
''When he went in and told the R&D group that they were no longer going to work
with IPX, he forced Novell to join the rest of the world. That's a start,'' said Robert
Sather, director of MIS at the Mayo Chemical Co. in Smyrna, Ga.
As for future products, Schmidt has to do a better job articulating how customers -
especially the 50% to 60% still running NetWare 3.X - will be able to migrate to and
use new network services. ''It's a big stretch to think of NetWare 3.11 file and print
services moving toward object-oriented applications and network services that manage
IP, security and Web access,'' said Jon Oltsik, an analyst with Forrester Research, Inc.
in Cambridge, Mass.
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Now, Jon Oltsik is a respected industry analyst (by me too). But, depending upon which way the wind is blowing at any given point in time, he appears to be in favor of what another analyst or trade journalist is writing about. I.e., If it's a buyout story, he agrees, If it's a "Novell will do it on it's own" story, he agrees. In this one people are skeptical, therefore, he agrees.
Now, that's not a bad job, IMO. I can do that too. The hard job is to take a position and stick with it.
My opinion (after being in this company since 12/95)...
1. If there is no "union" or "buyout", you won't see the same company in 12-18 months.
2. If 1. is true, then the stock will run (based on current umm.."activity") to perhaps 12-13 or so, and then stay flat for awhile, then drop.
3. If 1. is not true, then the takeout price is TBD (IMO) because I've "always" believed it would be some kind of "combination" of money instruments to make a deal (why? because there's too many outstanding shares).
4. I don't have a Top 5 list any longer, as I plan to close this year and open 1998 with an erasure of this symbol on my balance sheet.
I'll defer that question to someone else on this thread for now.
And, based on the article I just posted for you, I can see that many more anaylsts are re-enforcing how I've felt since February of this year, and again (amplified) in April at the annual meeting.
Hopefully, someone else will give you "their slant" on the current picture.
Good luck.
Joe... |
