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

To: ToySoldier who wrote (29138)	11/26/1999 9:43:00 AM
From: DJBEINO	Read Replies (1) \| Respond to of 42771

Why Novell is Even More Attractive Senior analyst: Chris Bulkey 11/26/99 It's really sad. These days investors are punishingcompanies for missing their co-called whisper numbers. Like this Article? Take Novell (NASDAQ: NOVL - Quotes, News, Boards). After Tuesday's close, it said it earned $0.17 per share in the most recent quarter. As the update on November 23 indicated, the quarter was strong and was consistent with Wall Street estimates. Even so, on Wednesday the stock closed down $0.94 to $21.06 after trading as low as $18.94 as the result of two downgrades, one from Morgan Stanley Dean Witter and another from Volpe, Brown. At issue is 'lower than expected sales for NetWare products.' Several pros had expected NetWare to grow by 20% or better, yet the company showed 'just 17% growth.' Big deal! This is a very dangerous game. The company has made substantial progress in establishing a presence in directory products. NetWare 5.1, which is expected to be released early in calendar 2000 is expected to be very popular. As mentioned in our last update, the product beat out a host of other worthy products to win the 'Best of Comdex' award at the Comdex Technology conference earlier this month. Growth into next year of 15% plus, which is expected, would be a good thing. Translation: There is nothing wrong with this picture. Preferred Capital Markets analyst Joel Achramowicz was quick to point out that, 'everyone is expecting some huge, explosive catalyst to push this stock up. The point is, it's coming, but it's just a matter of when. Things are going great and the company beat our revenue expectations and NetWare sales were very strong.' Another bullish indicator in today's trading was that Gruntal & Co. reiterated the stock a 'short-term outperform.' Vivek Rao, the brokerage's analyst is calling for a price target of $28 in the intermediate term and $32 in the long-term. Another issue some are questioning is the 23.8% jump in receivables to $305.2 million in the quarter. According to Achramowicz, 'this is not too surprising. At year-end the company gets a big quantity of license renewals and support contracts which are worked off for a period of up to two years.' Nevertheless, he adds a sizeable portion of these receivables will be taken down in the first fiscal 2000 quarter. Looking back, receivables jumped 16.5% to $246.6 million for the year ended October 1998. Yet revenue was up only about half that amount. Translation: Novell's wares are not sitting on some shelf somewhere collecting dust. In short, we think that these concerns are overblown. This is a company that has grown and positioned itself to benefit from the growing demand for directory services. Novell has quality products, a clean balance sheet and an active product pipeline that is ripe for solid news flow. This says nothing about the company's future plans for investment. The stock was oversold on Wednesday and is now a bargain. Bottom Line: Twelve months from now none of these concerns will likely matter. Novell investors will be looking for, and will begin to receive from the company a clearer picture on exactly what Novell is and what the company's products can do. individualinvestor.com