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: Joe Antol who wrote (20084)	2/11/1998 12:51:00 AM
From: E_K_S	Read Replies (2) of 42771

Hi Joe - Good job on the Oracle position....CS is another I like but I feel it will be a much longer term commitment but value is there. I too am looking at that one for a long term value/growth play. You might also check out XYLAN which is more expensive (PE=30+) but an excellent growth story. ====================================================================== New developments for Novell..... I understand that Novell has started construction on their new facility but have not been out there to look at the progress. Lot's of rain and mud which will probably delay Phase I of their project. If I recall the land is owned by Novell and the construction financing was to be completed through a long term lease back arrangement with an option to purchase by Novell sometime in the future. The short term impact will be positive for Novell as (1) the contractor/bank will finance the capital build out, (2) Novell will lock in a long term lease rate more favorable than what they are currently paying at their other leased facility located on Fourtune Ave., (3) Net fixed expenses to Novell will be less after the consolidation to the new building. Their free flow cash flow is still an important number to watch. I hope it remains positive. I am still concerned regarding the stabilization of revenues and believe the $800 million (revenue for FY'98) target number that we all discussed six months ago as now being too high. Revenues are falling too fast and the marginal contributions by new products is not enough to offset the loss in Netware sales. I still own a small position in Novell and believe CEO Schmidt is making many of the right moves but they still need that "killer" application....As far as I can tell it is not there yet. I will continue to wait and watch. I have moved the bulk of my Novell position over the last six months to Sun Microsystems and have seen a short term gain of over 30%. More importantly, I like the long term prospects for Sun and feel their management is much more focused than Novell's team. My goal for these investment dollars was to buy a company that is a leader in the enterprise networking industry with excellent products and a growing service revenue business. Although we both thought Novell fit into this category, we were wrong (looking back over the prior 36 month's). Being shrewd investors we reallocated our investment dollars...you to Oracle and mine to Sun Microsystems. Good luck with your investments and do not be too anxious to sell all of your Oracle too soon. Just think of it as a reallocation of your Novell dollars that are now performing to your demanding expectations. EKS

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