Dear Jim,
Thanks for the welcome, and also the assignment. Well, here's my earnings projection for Novell (please don't file suit if I'm off a bit.)
Five cents next quarter -- that's right, a whole nickle. For the year, I'd be comfortable with 24 cents. I'm hoping that Netware 5.0 will make a larger contribution toward the end of the year than people think now. I base this on the positive press that Novell is getting (throw out the suit stuff, although I think they could win something, eventually), especially in the technical press. When people start believing that Novell will not only be around in five years, but they will be providing the best product on the market, they'll be more inclined to purchase Novell products.
So, 24 cents in 1998. Now my three year earnings projections, based on nothing: 1999, 45 cents; 2000, 70 cents; 2001, $1.10. In three years, if Novell earns $1.10, and the analysts are projecting $1.50 for 2002, could this be a $35 stock? Sure.
To be honest, I have no idea what Novell will earn, other than what others project, and we all know how wrong everyone has been on this stock. However, I do know that for the first time in 18 months I have been optimistic about the future of this company, based on the new management and the seemingly good new products. I also know that I've recovered over three points in the last few months, and am close to breaking even! Glory! The positive Barrons article, along with brainshare, could add 2 - 3 points to Novell next week.
As far as PE's go, what's the PE on amazon, AOL, or any number of other overpriced stocks? How many stocks have we watched triple or more in the last year, when we know there's no basis for it? Sentiment is the reason people pay too much for a stock. The sentiment towards Novell is taking a drastic change for the better (it couldn't have gotten much worse).
Anyway, enough blabbing. I said too much, without really saying anything. No surprises, for sure. Talk to you later, I'm sure.
Regards, Bob |
