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Technology Stocks : Novell (NOVL) dirt cheap, good buy? -- Ignore unavailable to you. Want to Upgrade?

To: Paul Fiondella who wrote (27860)	8/24/1999 4:15:00 PM
From: Paul Fiondella	Read Replies (2) \| Respond to of 42771

Some earnings remarks PHOENIX (Dow Jones --- 8/20/99) Novell Inc.'s (NOVL) third-quarter earnings announcement left analysts satisfied but not sated. Vivek Rao, an analyst at Gruntal & Co., called it "another clean quarter for Novell." A company spokesman told Dow Jones that it was "a very strong quarter." He noted that during the course of the quarter, which ended July 31, the company reduced the volume of inventory in distributor channels to 36 days of sales from 49 days of sales. Within three quarters, the company aims to reduce that figure to 30 days, he said. This quarter's reduction in channel inventory cost the company another $10 million in revenue for the quarter, the spokesman said. Even so, revenue for the quarter was $326.8 million, up 20% over a year ago. That kept the company on the road back from its disappointing performance in the mid-1990's, according to analysts. "Maybe next year will be the home run year," said Stephen Dube, a Wasserstein Perella Securities analyst. Rao said that the company must continue to execute. "The real key for this company is they have got a real strong product cycle," especially in directory-based applications, he said. Directory-based applications are enhanced through their connections to the directory software that Novell provides to networks. Joel Achramowicz, an analyst at Preferred Capital Markets, said that the company needs to get more mileage out of its directory-based applications. Those applications generated third-quarter sales of $75 million, up 34% from $56 million a year ago. This year they accounted for about 23% of total third-quarter revenue. But Achramowicz had expected the company to post sales of $77 million in the directory-based application category. The company needs to beef up its marketing, merchandising and sales efforts and expand its "unique franchise" beyond its existing customer base, especially to corporate customers, he said. "They need to leverage this in a big way." ======================== There has been a slight pullback in the published Zacks analyst rating from 1.6 to 1.7, but that is still a moderate to strong buy. The earnings expectations for the current quarter are $.17 and for the year $.51. The earnings expectations for next year are $.71. Going forward then into Novell's strongest quarter you have a forward looking growth P/E of 40 times next years earnings yielding a price of $28.5. The close today at 25 9/16ths is 3 points below this level. ============ Is anyone following MSFT lately? Especially the Win2000 release date and any word on what they are doing with their active directory?