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: E_K_S who wrote (25471)	2/17/1999 10:29:00 AM
From: Paul Fiondella	Read Replies (2) of 42771

Earnings momentum The question in my mind has to do with how quickly NOVL will reach the level of earnings that it has historically exhibited, namely .17 per share. The speed with which it reaches that level, which it seems it can reasonably do with the revenue projections from its CFO, should benefit the price. In other words NOVL price currently has the benefit of earnings momentum. After it reaches some earnings level that it cannot easily exceed, its price is going to stagnate --- unless some new product line --- something fundamental (like Digital Me) then moves the stock higher. Wall Street always likes a stock that is showing increased earnings quarter to quarter. I expect this quarter to be much better than expected. Thus the price should reflect the earnings momentum. That means NOVl may trade higher than the multiples you have cited --- say 30 to 40 until it stagnates again with sales of its core product (netware). The window of opportunity with Digital Me (ecommerce) will close fast but I expect Schmidt knows that. In answer to your question of why Java or Jini can't provide security and network directory functions like NDS, I'd like to hear from some of our technical network types. My response would be that the promise of NDS lies in Novell getting into the digital vault business and providing the infrastructure for those types of partnerships EARLY IN THEIR DEVELOPMENT. Schmidt will have to initiate such partnerships and not wait for these companies to come knocking on Novell's door. Conclusion: Earnings momentum will carry the stock for this and the next two quarters. In a real correction (say caused by Japan) all the longs here will end up like we did four years ago unless they have bought puts. =================== Isn't Danti something. He quotes me when he can't answer your question and then he calls me all sorts of names. Isn't this the kind of guy you would love to have with you in the trenches? Watch your back MR. inferiority complex is about to make his move. (No comments necessary!)

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