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: Vip who wrote (17357)	9/18/1997 12:17:00 AM
From: Paul Fiondella	of 42771

Its the medication I'm taking. With regard to the current stock price: Short interest has been high and consistent at about 11 million shares for months. We should get a new report within a few days. The shorts had to have covered during the buyout rumor rally. I expect a decline from 11 million but if it isn't on the order of 3-6 million then I would see that as a negative. A lot of new buyers came into the stock with the earnings report and the buyout rumors. I attribute this to the general speculative overheated aspect of the technology sector of the stock market. They saw the stock with a bottoming out QTR and undervalued vs. the market. Now what do you think these people will do when they find the next QTR also produces a loss? Do you think they will go long or bail out? I suggest they will bail out with the first sign of adverse news. Then there is the market itself. As many people have noted, Novell is finally following market trends, going up when the tech market goes up and down when it goes down. It does not do this very strongly but many perceive the trend. So if and when the market corrects, why would anyone want to be in this stock considering the fundamentals? They will bail. Looking at the fundamentals, the key to this stock is revenue. The underlying message is that NOS sales are collapsing and there are no other products yet with the revenue potential of the NOS. That means more bad QTR's. Schmidt's long term strategy is to sell services for the new Internet market which also cause a buy of the Novell NOS. Buy into NDS and buy an IntranetWare server, buy into Bordermanager and buy an IntranetWare server...etc. (I don't fault this strategy since it is the only one that appears safe to him given the history of disasterous management moves, and the cards he has been dealt by the brain dead BOD.) This is a cumulative strategy and depends upon the Internet market maturing to the point where people will buy good products and performance ( and also Novell not eating up that 1.1 billion in cash). However the Internet market is much smaller and less mature than the general NOS market. In the general NOS market MSFT is eating Novell's lunch. Novell has abandoned the lower end of the market completely and has no prospect anymore of increasing its market share there. Its just too late. To sum up, it seems unlikely that Bordermanager or some other product will provide revenues in the short term to offset the loss of NOS sales. (THE TASK for the new marketing guy!!!)It seems unlikely that any company will buy Novell until Moab is released and gets some stability (then the IP UNIX bigots will take a look). Moab is the only product that can boost Novell revenues fundamentally. Moab isn't going to impact revenues for several QTR's. Moab is the key to a buyout. To sum up, its the 40% solution. I see the company downsizing again and the stock price disappointing all the new longs that I hereby welcome to the misery of this thread. As to the longs that didn't sell during the buyout rally....Wake up guys, these opportunities don't come around very often. You should know better by now.

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