Salah: My Thoughts....
>>Q2 Estimates
Revenues = 250M
Note: Schmidt indicated that business is stable, I concluded that
revenues are about the same as Q1 (252M).
Total Expenses = 245M
Note: Q1 expenses were 247M and they said costs can't be reduced
further, I assumed they could reduce by about 2M.
Other Income = 14M (about the same as Q1)
Gross Income = 250 + 14 -245 = 19M
Income Taxes = 6M (about 32%)
Net Income = 19 - 6 = 13M
Shares = 353M
EPS = 13/353 = $.04
The key number is 'revenues'. If they are around 250M, then the
situation is 'stable'. If they are materially higher, then progress
is being made>>
Let's say progress is being made......
>>Future Growth
I don't see it. True, they have a window of opportunity between the
release of NW5 and NT5, but this is going to be temporary. NW isn't
the dominant NOS it used to be and never will be again, NT is
becoming the defacto standard regardless of its shortcomings.>>
NT the defacto standard of what?? For the small guys you are right, but the enterprise is still solidly with Novell in more ways than many realize. 5.0 has a 6 mo. to 1+ year lead on NT5.0. If Y2K impedes NT5.0 acceptance then move that out. What about the DO? Split the company? Dems need the money. Asia's over. Watch them walk the fence: Silicon Valley / MSFT. Fact is, Gates cannot pull the same power grab with NThe did with windows. The marketplace for NOSs will become dispersed as the Global Network takes on more power and functionality. Result, all NOSs get a free-ride boost. Novell's Network services thrust puts it out front where NT can't even go for another 2+ years.
>Novell releases NW5 the quarterly revenues will surge to about 270M and then will return to the 'stable' level of around 250M. In fact,
that is what happened when they released Green River in Q4-96, except that things went to pot from there. I don't understand it, Schmidt was brought in to turn the company around, and the best he could do is to stabilize revenues at 250M, about 100M less than the quarterly revenues (factoring in channel stuffing) prior to his appointment.>>
Salah, this is like reading last years paper. Great copy during the Antol days, but the world has changed. Novell is not the same old company anymore. There is a new spirit which these comments fails to address. Look at the new products, all the awards, growing and positive mindshare that's building, etc.
You are still grounded in this rear-view mirror mentality. Once dog, always a dog, etc.
>>This brings me to the main point I want to address.
***************************
Schmidt Performance
I read all these great reviews about Schmidt performance from all
sources (people in the thread, a representative of Noorda, and trade
magazines articles especially the article by Jamie Lewis), and I
tell myself I should have missed something because although I like
the guy, I think his performance is mediocre, at best. Personally, I
don't think the situation would be much different if Frankenberg
stayed on. The myth that Schmidt materially improved Novell product
strategy isn't true, his strategy is basically the same as that of
Frankenberg's, if there are some differences, they aren't
significant. Schmidt hasn't solved the main problem novell had and
still has "MARKETING". Yes, I agree with Toy and others that their
products are superior and the new products are impressive
(Bordermanager, NDS on NT, Zen, ..etc.), but without strong marketing they are not growing. The fact remains they are selling products in a market which grows at about 30% annually (my estimate) and they can't grow their revenues. It is clear to me that they are losing market share at a hefty clip, or maybe someone has an explanation for stagnant (or declining) revenues with all these fantastic new products.>>
Ok, ok, ok....let's let the record speak going forward. We've made the turn. It takes time to build momemtum.
>> Let's review briefly Schmidt Performance:
The Good:
1. Reduced manpower by 1000. Although they needed to reduce manpower by 1500-2000, the remaining 500-1000 are being eliminated by attrition (200 in Q1-98).
2. Reduced total expenses by about 60M/quarter.
3. Surprised the Street with robust revenues for Q4-97 of 269M.>>
Agree
>>The Bad:
1. Contrary to all the reports about getting products out on time,
none of the products was released on time in Schmidt era, e.g.: NW5
was originally scheduled for Summer 97, then Dec. 97, then June 98,
then Summer 98, then .....>>
Let's move through this and then judge....
>>2. Conceded the small business market to MSFT, and still Novell
doesn't have an answer to NT for the low end.>>
Face it, NT grows from the success of Windows, period. If, over time, Window's dominance is met by alternatives - Java - then Java apps will come into play, making Novell's offering more attractive at the low and high end alike. I'm not trying to say they are banking on the success of Java or 5.0. What I believe in is that, fundamentally, over time, the power of the Global Network will enhance all existing NOSs in ways that are more closely aligned to the ways they enhance network services. Schmidt is placing Novell squarely in the middle of this road. I see NT still being positioned as if the monopoly power grab will be sufficient to keep it in play.
>>3. No change in the BOD even after the biggest shareholder (Noorda) requested it.>>
These things move slowly. I'll bet more is happening in this area than any of us realize. The catalyst is out there: Noorda & Schmidt. When you have a catalyst things happen.
>>4. Couldn't convince the big boys to adopt NDS (Sun, IBM, Oracle,
etc.), now he is talking about metadirectory.>>
Give me a break. We don't have NDS for NT running natively yet and you are quickly sounding the alarm. As best I can tell, NDS is being received very well.
>>5. Couldn't recruit a COO for over 6-9 months now.>>
Agree....
>>6. His latest 2 interviews on CNBC were pathetic.>>
He's no poster boy....
>>The Ugly:
1. Marketing strategy is not working. I guess his original 3-step
plan of Survive/Strive/Lead is progressing very slowly, I guess we
still are in stage 1, Survival.>>
Cheap shot. Novell has all the marks of a company poised to strive and lead going forward. We are past the bottom survival stage.
>>2. He followed the tradition of the 2 previous Novell CEO's, lying to
investors and WS, although he said when he was appointed that this
was in the past and he can't do anything about the past. Here are the
lies:
a. Preannouncement of Q2-97, revenues will be 300M-335M, actual
revenues 273M.
b. Projections for Q3-97 were about 270M revenues and 25M-35M charge for layoffs, actual numbers were 220M (normalized) and 55M,
respectively.
c. Projection for Q1-98 indicated flat or slightly lower revenues
relative to Q4-97 (269M), actual revenues were 253M, this is
misleading.>>
The channel problem is behind us. Schmidt took this into his hands and fessed up in a very open way. There's alot of BS that went on prior to his arrival - no question. The record he's documented inspires confidence.
>>When the CEO and other executives lie to WS and investors, it is one of two things, both bad, either they want to mislead or they don't
know what they are talking about, take your pick>>
A loaded statement Salah. Come on you don' t have the Antol chorus to validate and whine such gutter talk. If you really want to promote the discovery of truth comments such as this only point back at you.
>>. For Q2-98, his main theme was that business is stable, I took that to mean revenues will stay flat, let's see if he surprises us either way.
***************************
Is Novell Turning Around?
The simple answer is 'no', I personally don't understand ML upgrade
except if he is doing this in anticipation of a surge in the stock
price due to the imminent release of NW5. Fundamentals haven't
changed, their status follows the stagnation scenario of post # 14205
IMO. A turnaround will be in effect when we see one or more of the
following:
1. Insiders start buying the stock in the open market
2. Consistent revenue growth
3. The marketing type guys (Lake & Carlos) who sometimes post in this thread start telling us that Novell marketing is OK.>>
Agree Salah. Points well taken. All needed.
***************************
>>In closing, I'm sure some people will jump in and say I'm bearish
and/or I'm shorting the stock, the fact of the matter is I don't have
a position in the stock, but my knowledge about the company maybe
useful to some people. Joe hasn't posted for a long time, I miss his
posts.>>
Joe will be back after he reads this.....if only to slap you five....
>>Regards to all
Salah>>
Respectfully,
Fred |
