Joe, Just read your lengthy, but accurate analysis of NOVL and I agree with what you say. Here's a rather lengthy response of what I see that could possbily happen. Please correct or refute any mistaken idea.
First, You are totally correct that neither Novell nor Corel seem capable of advertising, marketing, or just plain communicating with the masses. Microsoft on the other hand is really much more of a marketing company than a technology company, strange as that may sound.
Basically, Alan Ashton, while sitting at the height of WordPerfect's glory, revenues, and profits, was slow to embrace the Windows interface and sold out with impeccable timing. He instantly appeared on the Forbes 400.
Novell, also sitting atop of huge success in 1994 was observing Microsoft making an incursion into the network market and decided to compete with Microsoft in the suite arena, who, took the world by storm with Word for Windows, Excel, etc. Unfortunately, Noorda retired simultaneously with the acquisition while Novell recruited the quiet and reserved Frankenberg from the ranks of Hewlett Packard. Frankenberg seemed to lack the necessary vision to successfully combine the operations, cut overhead, and market effectively.
The WordPerfect Group Management became arrogant as part becoming part of the prestigious Novell. They were, self serving, slow to change, and released late and sloppy Windows versions of WordPerfect. With version 6.1, they finally got it right, but it was too late, and too much ground was lost. Again, ineffective marketing.
Frankenberg, and Novell simply ignored the WordPerfect Group who became a "fall victim" for the loss of revenues on both sides. Novell made an impetuous decision to sell WP at an enormous loss of some $700 Million (another mistake) without making any effort to market their Suite at all. Like Corel of today, they simply expected people to buy their brand of "Lemonade" simply by putting up a "sign."
It should be noted that when Novell decided to sell the WordPerfect Group, a local group from Utah, consisting partly of WordPerect Management tried to buy it from Novell. It was my feeling that Novell would not strike a deal with them, probably as a penalty for failing to make WordPerfect profitable to Novell.
Enter the entreprenurial Dr. Cowpland. Yes, buying The WordPerfect Suite was the bargain of the century for $12 M in cash and some $140 M in stock. Add in a few royalties, and voila, the PerfectDeal was made, or was it?
With Paul Skillen, Orem quickly finished the long awaited 32 bit version of WordPerfect and the rest of the Suite. WP 7 was, and still is, a terrific product, and this is of great credit to the Orem team.
But, Corel, like Novell, followed the Field of Dreams theme "if you build it, they will come." That of course did not happen, and will not happen if either company follows that same false notion. That theme can only work in the absence of competition.
The problem for Corel is the Microsoft Marketing Machine. It takes creativity in promotion, advertising, and mass communication, as well as quality products to begin to chip away at Microsoft's domination.
But, like Star Wars, an effective and properly orchestrated rebellion, can make great inroads against the Empire. Rebellion does not imply denigration of MSFT, or a combat of words, but rather, a better suite with better features, and mass communication to generate emotional as well as practical reasons to motivate the computing public from all sectors to "buy."
Now both NOVL and COS/COSFF is languishing badly, but, Novell still has a great deal of cash. Give Frankenberg credit here. They do not need to sell one million shares of COSFF for the paltry $3 M it will provide, so what could their motives be:
1. To push the stock into penny range with the hope of convincing the majority of shareholders to support the dismissal of the current Corel Management and thereby have another crack at capitalizing on their investment.
2. Maybe Novell only announced the intent to sell through the SEC filing to see the effect on other shareholders willingness to sell on the idea of Novell bailing out. Again, maybe to drive down the price and then repurchase or purchase more and more shares to gain full control.
3. If Novell gained control of the Suite, Draw, and Graphics, they might begin to become the marketing company they "could become" and thereby pick up badly needed revenues. They could also cut off Ottawa overhead and keep the WordPerfect organization in Orem. What a cost savings this would be.
4. Corel is presently crossing into the Novell territory of Java, at least to some extent with Remagen, Alta, Resero, and possibly the networking end of the VNC. With a "takeover," and the elimination the Corel overhead, maybe Novell sees an opportunity to regroup, consolidate, and improve products. With considerably more cash and credibility, they stand a good chance to return to over a billion in sales and quite possibly more.
5. Under any condition, the Novell Board must be disconcerted with Corel's inability to focus on selling their core products, and providing value to shareholders. I'm quite sure that Novell did not write-off their holdings in Corel until they had to with each successive downward shift in the share price. I'm sure they are not thrilled with losing another $100 M on their PerfectDeal with Corel. It doesn't seem that difficult to regain that $100 M and more, by cutting Corel overhead, and jumpstarting WordPerfect sales.
Your post caused this lengthy response, but whether or not any of this will happen is anybody's guess. Its been fun to think about.
Scott |
