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: Ghassan I. Ghandour who wrote (8606)	2/27/1997 12:16:00 AM
From: E_K_S	of 42771

Hi Ghassan: Can we have some more hints on this "other" company. I know it is not Borland (very good moves upward on this stock)....I see Novel's high end to be $14.00 at full market value. I have revised my downside target to $9.00 (worst case!) but propabaly will consolidate in the $11 5/8's range. Unless we can see growth of 20% in our products and new services (still waiting for this one.), the market PE will remain at 10-14 x's earnings. MS says earnings to be $0.80. Therefore maximium upside in this stock (IMO) is $9.60. Ok now add back in book value (that includes all equity assets) is now $5.25 per share...takes you to a fair value of $14 7/8 (w/o new CEO). Novell has to now get a new CEO which can bring some 'positive' culture and fight back to this company. This may take some time (at this time 'last chance'...) If Ray Lane is obtained, Novell will have better than 50:50 odds of achieving $22. No Ray Lane and all I can see now is $14 7/8....and who knows what the rest of the story may be....! I will be buying at $9 and $9 7/8 range and have hedged my portfolio for a $15.00 target price by August 1997. By the way long term holders may want to sell the August 15 call for around $1.00. This is good short term return if in deed we must wait for the new CEO 'turn-around plans'. Good luck with your investments... This investor will sell another 1/3 NOW and hedge the rest of the stock with August $15 calls (with $1.00 preminum). I do not suggest buying puts now but wait to buy new shares in the $11-$11 3/8 range. A new CEO announcement could get a quick $1 1/4 bounce higher. EKS

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