Hi Eric,
According to Giacommi and Fiondella and others, whose posts I quote below
Current revenue 626+292+166=1084 projected to increase to 1,295 FY 99
I would also say, as you well know, that the market is different than it was even 3 years ago. The average PE is not what it used to be.
This said I'm personally not here because of the PE's. A few years ago Noorda thought that the way (probably the only way) to keep increasing revenues was to go after the desktop applications and head to head against MSFT. We all know what happened. Meantime the Internet has changed the world and in particular NOVL and its prospects. It has created a virtual network for billions of people and a whole wide new market for NOVL. If NOVL can leverage its franchise with great Internet products we could have a huge winner here. Those new Internet products are starting to come out: PEs initially don;t count in a growth stock. Let me put it this way: I think that NOVL's prospects today are better than ever.
Another area of concern for the NOVL investor is MSFT. However here the news are also good. MSFT is not likely to be the same after the trial is over. NT is delayed and MSFT is in disarray. If you are looking for their directory story ask Houdini..NOVL on the other hands is ready for NT 2000 with NDS for/on NT: great move! This product alone could be a another huge winner for NOVL... if NT 2000 is successful..
On the other hand from a more conservative point of view, computing PEs and all that...you can see that NOVL is not too far from todays average PE (32?). You should also factor in the 1 bill in cash and the fact that they are trying to reduce the number of shares by 10%. EPS are growing: from Y98 to Y99 EPS will increase by more than 100%.
So I think that NOVL is a good bet at these levels even if you don;t buy the *new NOVL story*.
References:
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Novell's 1998 revenue was
Server platforms: $626 million or 58 %. This included a surge in directory-enabled
NetWare 4 and 5 and a decline in NetWare 3. This was up from $613 million in 1997.
Directory-enabled applications and infrastructure: $292 million or 27 %. This includes
NDS for NT but also products designed to work with NDS like GroupWise,
ManageWise, BorderManager, NetWare for SAA, and ZENworks. This category was
up from $233 million in 1997. Raney hinted at new products in this segment to ship later
this year.
Service, support, education, other. $166 million or 15 %. This includes the growing
consulting business and the huge worldwide effort of certifying CNEs, etc., plus
technical support, royalties related to sold-off products.
Message 7781383
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Server platforms was $626 million in 98 up from $618 in 1997 and we use 15% as
the projected increase then we are looking at $720 million. Take $292 for directory
enabled apps and add 40% and we get $409 million. Leave service and other constant
at $166 and you get a projected revenue of $1,295 million.
Message 7782607
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