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: BJP1946 who wrote (18724)	11/26/1997 9:18:00 AM
From: Don Earl	Read Replies (1) of 42771

<Are you sure that you are looking at this the right way?> Possibly not. They do account days inventory in the channel and in house inventory separately. All inventory shipped to the channel is counted as revenue regardless of sell through to end users. At the end of Q3 channel inventory was "less than 45 days" and "the lowest level in 10 years". Now they say they are "fully geared" to bringing down inventory levels to 45 days or less. I don't see how it can be read any other way than; there is more inventory in the channel than there was at the end of last quarter. I don't really think they tried to stuff the channel to make the numbers. I do think they shipped what they thought could be sold and couldn't sell it. If "reduced days sales outstanding to 79 days at the end of October..." refers to something besides channel inventory, then I used the wrong number in my figures. In the context of the article, I understood the numbers to be refering to channel inventory. If that was a mistake on my part, feel free to correct me. I've worked hard to understand as much as possible about Novell but that doesn't mean I have all the answers. My long position through out most of Q4 was based on the belief that 300 million should be the bare minimum. When I became convinced that, along with other factors, marketing was not up to the task and that 300 million would be virtually impossible, I bailed and went short. I haven't double checked to make sure but I believe cash dropped in an amount consistant with my estimate. My game plan was based on a loss of around -.04. I figured I could trade or exercise my puts in the low 6s. Go long for a dead cat bounce to 7, take a profit and say goodbye Novell. It didn't work, but it looked great on paper. Plan B is to hold the puts until the gap left at 8 1/8 fills and I can make a little profit or break even. Regards, Don

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