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: Gerald M. Gualano who wrote (5227)	11/26/1996 1:04:00 PM
From: Pat Armstead	of 42771

Latest on NOVL from analyst RATING: Market Perf. Change: None 12-Mo. Target: $11 VIEWPOINT Novell will announce 4Q96 (Oct) results today after the close of market. Our estimates are $380 million in revenue and $0.17 in EPS, but our level of confidence in Novell meeting our revenue estimate is low. The consensus is $0.17. 4Q96 is subject to the following events: (1) revenues will more accurately reflect channel sell-through, after the inventory work-downs of 2Q96; and (2) expect little in the way of the end of the quarter channel fill effect which may reduce the company's flexibility with respect to top- line. We have modeled slightly higher NetWare revenue with a modest increase in NetWare 4 from 3Q96 levels given the year-end strength. Our concern is that the 2Q inventory stocking change altered the distributors' buying cycle, which used to negotiating better terms at the end of the quarter. It may take the distributors and Novell a bit of time to work-out the wrinkles of this new relationship, which introduces some uncertainty to our revenue estimate. We continue to focus on NetWare 4 product cycle and we remain disappointed in Novell's inability to grow this business. Although Novell is cutting costs and head-count in the administrative areas following the sale of several businesses (most notably, Word Perfect), it can take several quarters to streamline these operations. Our rating remains Market Performance given the revenue/expense transitions in the near term and lack of a cohesive strategy to grow the business longer term. * DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION OR AN AFFILIATE MAKES A MARKET IN THIS SECURITY AND HAS PERIODIC POSITIONS IN THIS SECURITY IN CONNECTION WITH THIS ACTIVITY. c Donaldson, Lufkin & Jenrette Securities Corporation, 1996 Additional information is available upon request. First Call Corporation - all rights reserved. 617/345-2500

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