Hi Eric - Thanks for sharing your analysis. I believe you are right on target, especially with: "(2) the stock in undervalued." The numbers look good and indicate the company's true underlying value.
As for: "(1) the market does not think that Novell can keep sales at these levels." There are many companies that have far less earnings or even negative earnings that are trading at a much higher price than Novell. An example of perception versus reality and how it affects stock value.
Novell has a good financial track record, with the exception of a couple of years, and they are positioned with timely products ready to sell to an already established customer base -- of millions. Many companies would consider this quite an enviable position.
I don't have the benefit of a long history with Novell, but my best guess is that the market has had some bad experiences with Novell from a public relations standpoint. And too, that Novell is now operating in the shadow of the Microsoft juggernaut that has much of Wall Street believing that Microsoft will, or already does, rule the computing world.
From this shareholder's perspective, Novell is well positioned to participate in the expansion of the Global Computing Network. It has entered into alliances with major corporations to provide one or more of its products and stands ready to reap huge rewards going forward. Also, there may be an interested suitor who recognizes Novell's potential and well understands the value of FIN-4.
So, my conclusion is that Novell is doing well financially and has a great product with a great opportunity to capitalize on the accelerating growth of the Internet / intranet market. And for those who say that Novell's management has no vision, I can only wonder how many billions of dollars Novell would have if only management had a vision. Oh, I guess marketing must have sold something too.
Wish I still had WDC @ $14.5 -- If we're lucky, Novell will match WDC one day.
Regards,
Elmo |
