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: dwight vickers who wrote (24565)	11/29/1998 11:12:00 PM
From: Jack Whitley	Read Replies (3) of 42771

<<Very big issue with companies like MSFT. I saw a report that stated that something like 80% (it's been a while) of MSFT's earnings in 1997 would have been offset by what it cost them to buy shares in the marketplace, to fulfill employee option obligations.>> The best article regarding this subject appeared in the May 18, 1998 issue of Forbes magazine, pp 212 "Stock Options Are Not A Free Lunch". Excellent article and excellent chart showing companies that have option allocations greater than 25% of their shares outstanding. The top five - Option Allocation as a percent of Total Outstanding Shares Company Total Allocation* 96-97 grant Delta Air Lines 55.47% 1.24% Merrill Lynch 53.95 6.44 Morgan Stanley 51.22 3.87 Microsoft 44.83 4.45 Bankers Trust 43.09 8.79 * Percent of weighted average shares outstanding on a fully diluted basis. Source - Pearl Meyer & Partners Novell is not in the top 14 on the chart (thankfully), with the 14th place company having 25.57% of shares outstanding allocated to options. It would be interesting to know what the exact percentage allocated to options for Novell outstanding shares is. This investment has turned out to be one of the most satisfying I have ever made. I've been posting here (and buying shares) for 2 1/2 years, even in the face of forecasts of doom from the supposed tech savvy. I hung in there due to the posts of the REALLY tech savvy who helped me decide how and why Novell would ultimately succeed, and now I am making an almost indecent amount of money. As far as uses of cash go, buying back shares makes the most sense to me. If some of the buyback winds up being a wash, so be it, as long as the ultimate reason for issuing the options is to hire and keep talent that will standardize the Internet directory platform on NDS and SCADS (and related applications). If that happens, they can issue a lot of options, and still have a soaring stock price. jww

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