Hi BJP1946 ...... About Gloom and other items
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>Just to try to slice off a tiny bit of the gloom.<
Let me make my position very clear, I want Novell to be the most prominent software company in the universe, period. Further, I do believe that they have the products and talents to do it. However, they haven't shown the will or fortitude to do it up till now, and when they do I will be first to jump on their bandwagon. Although I don't like to put words on other people mouth, but to the best of my knowledge, this is the same position of Joe, Paul, and several others of the 'Gloomy' bunch.
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>I get Goldman morning research and revenues were about $30 million more than they projected. There was not a hint that the revenues were suspect in any way, nor have I heard anyone suggest otherwise. So there was a pleasant, though modest, upside. But isn't this what Schmidt has been saying.<
I thought I indicated that Q4 results were impressive, in fact I said their revenues exceeded my expectations by 50M. Further, I didn't question the quality of the revenues, I simply didn't understand their statement about channel inventory and DSO, if you do. please enlighten me. As I stated in several previous posts, the problem is not in channel stuffing, the problem is declining sales. If they have growing sales, channel stuffing would be of no concern whatsoever. Let me try to clarify this point again, they said that channel sales for Q4 were 54% of total sales, this is ~146M, with 45 days channel inventory, the channel inventory is ~73M presently. Now, let's assume their channel sales zoom to 200M in Q1-98, if they supply the channel with the
200M sell-thru sales, the channel inventory will be reduced to ~33 days, and believe me the channel will be calling them requesting more products to meet the hot demand, for all practical purpose they need to supply the channel with 227M to maintain the inventory at 45 days. On the other hand, if their channel sales declined to 100M in Q1-98, if they supply the channel with the 100M sell-thru sales, this clearly is channel stuffing, why?, because the channel inventory ballooned to 73M, or ~66 days supply, their sales to the channel should be limited to 77M to maintain the inventory level at 45 days. During 96 and 97 they were forcing the channel to buy the sell-thru quantities while sales were declining and that is how we got two inventory reductions in Q2-96 and Q3-97. The main problem is in marketing, marketing people work closely with the channel but don't talk to the end users, and that is why they get killed by MSFT, because most of the people don't know what Novell sells. Schmidt recognized this problem early and talked about direct sales force but I don't know whether they made strides in this area.
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>When he warns that next quarter's revenues will be flat to slightly down, he's doing exactly what he's supposed to, keeping expectations down and hopefully surprising on the upside. You can't complain about negative surprises and about tempered expectations at the same time.<
BTW, I haven't complained about anything, but the statement about flat to weaker revenues should be of concern. This is why, Q1-98 has about 7 days less working days than Q4-97 because of the holidays, this should reduce revenues by about 8% if the revenues stabilized. However, with the new products released in Q1 (namely HostPublisher, NDS on NT, and an upgrade of ManageWise) and full quarter sales of BorderManager which was released during Q4, one would think that these products should easily make up for the short quarter and increase Q1 significantly over Q4 revenues. Unfortunately, this is not going to happen. The only conclusion I can arrive at is that revenues haven't stabilized yet.
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>I believe you are totally wrong when you value the company at $9 because they are anticipated to only earn $.30. Everything is DIRECTION when you are trading stocks, not absolute numbers. If they start generating cash and get a hot new product or two and start buying back shares, the stock's a double from here within 12 months. No doubt about it.<
Yes, I could be totally wrong and I have been wrong before. But, I would like you to read your statement again. I made my statement based on what I know, but you told me I'm totally wrong not because my numbers are not reasonable, but because you are speculating on hot new products and share repurchase. If you know of something we don't know, please enlighten us.
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One final remark, if you don't like my "Gloomy' views, rest assured that you will not read many of them, I post once in a while. Would you care to tell me what is BJP1946?, I don't like mysteries.
Regards
Salah |
