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

To: George Papadopoulos who wrote (34757)	11/9/2000 8:37:52 PM
From: Paul Fiondella	Read Replies (2) \| Respond to of 42771

I may currently be bullish about Novl but I've been on all sides of that equation. No one has ever referred to me as a long time bull, just a long time investor. No one can predict with any certainly the market's reception of the Volera spin-off. However this is my analysis. All Novell has done is convert the quarterly spending that it does to support its net content division --- some $30 or so million --- into a one time capital expense of $80 million. Novell will lose $2-3 million in revenue but save $30 million. That $27 million net goes to Novell's bottom line. That is nearly $.09 a share. The potential effect on NOVL is to move its earnings to what ever they will be in FY 2001 plus $.36. That is a minimum stock price effect of +$10. If this is a bottoming quarter, you add increasing revenues to that $.36 and you come up with a share price of $20-30. The second value for Novell is to monetize its internal technology and pump that value back into the stock. The outside investors in Volera will be making that investment in order to get access to Novell's brain power and engineering ability in Drew Major. In fact once they wake up to what is going on here there will be a bidding war for Volera. It will face a number of merger and acquisition partners. It is a natural acquisition for a company like Akamai which has stock which it can use to buy companies like Volera. It is a strategic acquisiton for a Nortel, Lucent or Cisco. Third Volera will need new marketing, sales, and CEO level executives. The outside investors know the track record Novell has for management. Does anybody think they will put money into this company without effective control over executive management? This leverage should not be underestimated in geting manaagement to perform. Volera is a start-up. It will have to get its act together quickly because Mother Novell will no longer be providing a blank check. I think these advantages do not depend on being a bull or bear about Novl. You can disagree with my analysis but that is what it is an analysis not a sentiment.