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: Paul Fiondella who wrote (18701)	11/25/1997 10:54:00 PM
From: E_K_S	Read Replies (1) of 42771

Paul - Good breakdown of the Novell financials...here is a bit more to add to your report (http://www.techweb.com/investor/news/1997/11/1125novl.html) "Revenue was down 30 percent from last year's fourth quarter, to $269 million; $99 million, or 37 percent, came from network software licenses. Novell, which has been shoring up its reseller relationships to stem the loss of LAN operating system market share to Microsoft's NT, said fully 54 percent of all sales came from channel partners." ====================================================================== I also expected to see more savings from the 1000 employee layoff but perhaps that will not kick in until next quarter. The big number that everybody has focused on is the revenue figure but as you pointed out ..."Revenue is down 30% from fourth quarter..." as are earnings per share. I guess the way I continue to view this company is what will the revenue picture look like 18 months from now. We know that many of the current product lines will be generating less and less revenue and we only have Border Manager and Moab to contribute to new growth. I am still not convinced that we have finally stabilized the revenue shortfall and would like to see a whole new category of revenue (from a brand new product or service) which contributes atleast 30% to the overall pie. Is it possible for CEO Schmidt to deliver a new innovative product or service in the next 18 months that would represent 30% of Novell's 1998-1999 revenues?? Well certainly it is possible.....but based on managements past track record and their failure to generate new business products (especially in the low end market), I do not see it occuring yet on my radar screen. I get the feeling that CEO Schmidt is focusing on the installed customer base and the NetWare 3.1 to IntraNetware 4.0 conversion/upgrade window. This must be accomplished before the release of NT 5.0. This action alone should stabilize the revenues at the $1 billion/year level for 1998-1999. Unless CEO Schmidt can come up with a killer application, product or service which generates significant new revenues in 18 months, I just do not see the growth potential (ie.growth rates) to value this stock above $10.00. Until the street is convinced that Novell can grow their revenues at a 20% level, I think this stock will be in a trading range. Based on today's results we have achieved a NEGATIVE growth rate of 30% over the past year! This is a growth stock story right?? Is this a stock you would really want as a core holding in your portfolio? I think not...perhaps a reevaluation in 18 months may see things differently but this investor continues to shake his head. EKS P.S. Salah did show that this was comming over 8 month's ago...but I just did not think it would get this bad.

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