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By Joseph C. Panettieri, Sm@rt Reseller Online
November 3, 1998 12:58 PM PT
While Yahoo Inc. and other high-flying Internet stocks dominate the NASDAQ spotlight, one of the software industry's older giants--Novell Inc.--is quietly emerging from the shadows down on Wall Street.
Novell's stock, once left for dead by investors, has risen more than 55 percent in recent weeks, climbing steadily from $9.50 on Aug. 31 to $14.87 on Oct. 30. It's currently trading well over $14. The strong performance represents a monumental victory for Novell and its resellers, who are seeking to ensure that Microsoft Corp. doesn't extend its desktop monopoly to the server.
Several major factors have fueled Novell's rebound on Wall Street. For starters, chairman and CEO Eric Schmidt earlier this year cleaned up Novell's channel inventory problems, revamped the company's management ranks, and refocused the research and development team on Novell's core competencies: network administration, directory services and the company's NetWare franchise.
Novell's stock crept higher as NetWare 5, a major upgrade to its flagship product, neared delivery in September. In a stunning move that mirrored Microsoft's marketing savvy, Novell managed to convince about 12 Fortune 500 companies to deploy the new operating system prior to its general release. Despite a little-known directory bug, the new NetWare has proven popular in Novell shops seeking native IP support.
Novell also has made the most of a major break: Microsoft's continued delay of Windows 2000 (formerly known as Windows NT 5.0) and its bundled directory service, dubbed Active Directory. The new Windows release isn't expected to arrive until the second half of 1999, which gives Novell roughly one year to make its Novell Directory Services (NDS) the de facto directory standard on corporate networks.
Positive buzz
Enter NDS for NT 2.0, the first Novell Directory Services release that
runs natively on Windows NT Server. Stealing another page from
Microsoft's marketing play book, Novell has generated positive buzz
about the new directory long before its delivery--which should happen
before the end of 1998.
The good news doesn't stop there. Novell's recent NDS partnerships
with Lucent and PeopleSoft, just to name two, could help the company
overcome its Achilles' Heel: poor developer support. If Novell manages
to make NDS the de facto directory for intranet applications, the
company will cement its position on corporate servers long before
Active Directory arrives late next year.
Still, Novell isn't a no-risk bet for investors and resellers. The
company's GroupWise offering badly trails Microsoft Exchange and Lotus
Notes/Domino in the groupware market, and customers continue to deploy
NT Server (1.3 million units in 1997) far more often than NetWare
(900,000), according to International Data Corp.
Despite Microsoft's NT offensive, Novell's revenue was a healthy $272
million in its fiscal Q3 ended July 31, compared to $262 million in
Q2. Also, Q3 income was a respectable $27 million, up from Q2's $7
million. Novell hopes to build on those numbers, and maintain its
recent rally on Wall Street, when it announces Q4 financial results
later this month. |
