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

To: Don Troppmann who wrote (29112)	11/25/1999 1:11:00 PM
From: EPS	Read Replies (1) \| Respond to of 42771

Don, I think NOVL posted a good solid earnings report. But the street and many here expected more. While revenues are growing they are not growing fast enough to match expectations. The stock at these levels is cheap with a PEG of 1 compared to PEG of 2.4 for the S&P and at about 42 PE vs 28 for the S&P. Thus a price in the 23-28 range is perfectly reasonable. The criticism that follows is from the point of view a long time supporter and shareholder and is intended as constructive criticism. I was disappointed to see that revenues generated by Single Sign On and Catching were weak, although admittedly these products are only now coming to market. For all the hoppla about Netware 5 it is scarry to compare how much it brought vs the amount of moneys paid in options to management..!!!!!!!!!!!!!!!!!!!!(An observer from Mars could come to the conclusion that the main purpose of it all is to keep the managers very rich. A martian would be very puzzled to see that good moneys are used to paid sub par managers and not used to market more effectively) I am also disappointed that NOVL has not developed a competitive pricing policy for NDS licenses aimed to Internet usage. While I think the sentiment on this board is much closer to the analysis provided by Wasserstein Perella, the Morgan Stanley analyst is right on the money about revenues, execution etc etc..Bottom line: NOVL needs to be much more aggressive and execute better. Take for example the fact that NOVL has been sitting on a large amount of cash for a long time. For a company in a rapidly growing space, I see this as negative. If NOVL does not know how to use this money to grow the business then it should it give it back to the shareholders! Other negatives such as marketing, lack of focus and poor execution have been addressed in extenso here. To give you an example when comparing INKT to NOVL. I watched the other day the INKT CEO on CNBC. He was visibly upset that day by the price action of his stock (that day they were going down..for a change) which he defended strongly. He said to be pushing aggressively into the e-business to business space leveraging his caching business and the rich valuation of his company. When I listen to Eric I don't get the same intensity and focus. Mind you INKT's position is rather precarious if they miss their numbers, if things go wrong they will be punished tremendously. INKT's life line depends on growth and a good price for its stock. NOVL managers are apparently happy regularly cashing their fat bonuses (especially the marketing guys and some old BOD members). On this line of thought one comment Eric made during the q&a illustrates well my point. He said that using caching technology NOVL could easily get people watching TV to be able to replay in real time without having to use a VCR or any other technology. He said this and I understood that for him this was an academic exercise (Eric I have been there) "we can do that better it is trivial" (-but we don't care was implied): as an investor what I really want to know is how is NOVL marketing the technology, who are the partners, and how the technology is likely to evolve if combined with.. and of course most importantly how much money it can generate if..Eric is a great CTO and he is learning to become a CEO I am very sure he will personally do very well but I am not sure anymore about NOVL.. Frankly, at this point in history I think that the best way that NOVL could unleash value for its shareholders is buyout by a more efficient and powerful organization that would throw out all the fat ineffective layers of management, decaying engineering groups and sub par marketing and picking up the gems will push hard to execute. VD