Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: PJ Strifas who wrote (29293)	12/12/1999 11:27:00 AM
From: DJBEINO	Read Replies (2) \| Respond to of 42771

Against The Grain-novell pick for 2000(MAGIC 25) Novell was so close--then investors turned on the rebounding networking-software maker yet again. After spending years as Wall Street's favorite whipping boy, the result of many failed attempts to compete with software superpower Microsoft, Novell seemed to hit its stride last year with its latest version of NetWare, its network operating system. Sales of NetWare 5 have been boom ing, and Novell's earnings surged 95% through the first three quarters of fiscal 1999. Investors, sensing a true turnaround, bid shares to more than $30 in July, up 100% since we picked the stock for the 1999 Magic 25. But Novell's days as a hot stock were short-lived. In part, investors were worried about Y2K and the potential that corporations would cut back on spending, hurting NetWare sales. They were also spooked by the departure of Christopher Stone, a senior vice president who was a driving force behind Novell's recovery. But the real reason for the decline was that investors again grew concerned about Microsoft and the much-anticipated release of Windows 2000 (then expected by year-end 1998), an improved version of Windows NT that will be positioned to compete with NetWare. Several analysts downgraded the stock, and Novell shares have since fallen below $20. Novell isn't dead yet. NetWare's biggest advantage over Windows products is its Novell Directory Services, a kind of electronic Yellow Pages that keeps track of all data stored on servers, which is crucial for network administrators. According to industry researchers at International Data Corporation in Framingham, Massachusetts, the directory services market will grow to $5 billion in 2000, a five-fold increase in just two years. And unlike the directories that come with Windows software, NDS is compatible with a variety of operating systems. Some small and midsized companies may still opt for Microsoft when Windows 2000 is finally released--the launch date has been pushed back to February 17--but large companies running everything from Linux to Sun Solaris on their servers have an incentive to sign on with Novell. What's more, Microsoft's tardiness in releasing Windows 2000 has given Novell a chance to grow its installed base and build up customer loyalty. "The chief information officers I have talked to have been very happy with the products and services they have gotten from Novell," says Eliot Glazer, an analyst with duPasquier & Co. That's a big deal: already, 80% of Fortune 1000 companies that use directory services use NDS. If Novell has won over its customers, it will have to work harder to win over skeptical Wall Street analysts. But the company is poised to earn $0.78 a share this year, for 56% growth, and then $1.10 next year (38% growth). And after the recent pullback, shares can be had for a p/e of just 25. --Jeff Schlegel individualinvestor.com