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: Spartex who wrote (20502)	3/1/1998 12:48:00 PM
From: Don Earl	Read Replies (1) of 42771

Hi Quad-K, It's almost a sure bet that the street did NOT know about the impending suit. In fact, it's almost a sure bet that most folks did NOT know about the suit until after the close Friday, as that is when it hit the NASDAQ site. The last few days have been what I tend to think of as lemming runs. It's adrenalin based buying that doesn't take into account the possibility of cliffs. The suit can NOT possibly be considered good news. The implications of the complaint are things that would have a huge impact on Novells business that go far beyond the end of the class period. The complaint charges Novell with pulling some pretty dirty tricks on their channel partners. The allegations that Novell dumped a ton of product into the grey market is not something that trying to clear the channel in Q3 would correct. The possibility that there is still a ton of inventory floating around that legitimate resellers can't compete with is bad news. Novells increasing shift to direct licensing agreements also cuts the resellers out of the food chain and probably at prices the resellers can't compete with. Schmidts policy to stop end of quarter discounts is also something that would make it harder for resellers to sell Novell products with better profit margins. It's no wonder that Schmidt spends a lot of time talking about trying to rebuild relationships with the channel. It's also no wonder that the VARs are pushing NT instead of NetWare. Better profits and less chance of getting their throats cut. It becomes more apparent why Schmidt has been talking about years to accomplish a turn around. The numbers the company reported the last 2 quarters don't look any less free from manipulation to me than those reported in the class period. If Novell were audited and forced to restate earnings, it would have the potential to turn NOVL into a penny stock. IFMX went from mid 20s to a low in the 4s under the same circumstances. Adding an E to the end of a ticker is NOT good news. I honestly don't know how the the news will affect the price. All of the times I've seen suits filed have been during the bargain hunting period after most of the downside has been taken out. It may turn out to be a non-event but it certainly isn't GOOD news. The worst part of the current situation is that there has been a lot of stock purchased at much lower levels in the last few weeks. A lot of investors can head for the door and still show a profit on anything above 8 1/2. If CNBC decides to run with the news, the lemming herd might decide it's time for a swim. Regards, Don Disclaimer: I do my own research, form my own opinions, speculate, and draw my own conclusions. My posts are for entertainment purposes only and are not to be considered investment advise. Actual facts may differ materially from conclusions I may have drawn.

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