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

To: Don Earl who wrote (18556)	11/18/1997 11:22:00 PM
From: Paul Fiondella	Read Replies (2) \| Respond to of 42771

I wonder if there will be a severe short reaction tommorrow? Although the stock has been propped up at a far higher level than I ever expected it to be, the volume has been really low. Not too many suckers going for the bait. So when do they pull the plug? (Come on Alphonse give us the dope.) The Nikkei is down tonight, as it the Hang Seng and virtually all other Asian markets. Korea has given up defending the Won. It dropped the limit down three days in a row now. Other than the Far Eastern Economic Review (www.feer.com), the consequences of the Won decline are not getting much press play. However the NYTimes and WSJ both have articles today. Must reading. Guess where our Treasury Secretary is?!

To: Don Earl who wrote (18556)	11/19/1997 12:02:00 AM
From: Alphonse Viazzo	Read Replies (3) \| Respond to of 42771

Don, thank you for your kind words. I consider the contributions that you have made to this thread to be among the best. I take no glee in your suffering. In fact, new investors would wise to learn from your experience. Novell does not invest in its marketing and sales groups, in its product strategy and acceptance, and in its customer and shareholder relations. The company is a monument to failure, nepotism, narcissism and mediocrity. Novell once had it all. Now all it has is its legacy. The company is corrupt and adulterated from within--an apathetic board, indifferent management and a distorted arrogance of self-importance. The only reasonable investment for this company is to bet on a takeover or on takeover rumor, which draws in more fools and suckers who failed to do their research. I've based my valuations on what Salah and Eric have researched. I believe that Salah is truly a financial prophet. His batting average is amazing beyond belief with regard to this company. Eric recently stated that revenue is likely to hit $600 million next year. This is realistic. If you based your investment in Novell on a takeover, then consider the following. The industry pattern for takeovers for companies the size of Novell is to offer 1.5 times annual revenue. This values Novell at $900 million. Add to that its cash/investments and you get a valuation of $1.9 billion. Divide this by the number of shares outstanding and you get a value of $5.43/share. This is the highest valuation I would give Novell using the most optimistic scenario. The fact that the market is already factoring in an impossible turnaround makes this stock still very attractive from a short position. Add to this the fact that there is a clueless CFO, a self-interested chairman, an innocent CEO, a belligerent legal department, and shit for brains marketing, and you have a current premium of $3/share. Add to this the fact that Novell is betting the farm on Java (unproved technology), it has zero credibility in the investment analyst community, has been removed from significant indices of technological leadership, and remains isolated both physically and psychologically from mainstream technology, and you have a recipe for the great unknowns. Hence the valuation of Novell compared to recent IPOs. Wall Street doesn't trust Young and doesn't believe in Schmidt, as he has no experience in running a company beyond putting together budgets. His achievements at Sun were a complete fabrication as he fought Java until it was too late, and then he jumped in front of the train. Schmidt, like Frankenberg before him, is a nice guy. He is clueless, mindless and gutless. He knows what needs to be done, but doesn't do it. No balls. No guts. No glory. He's probably already asked for his old job back, hiding in the shadows where he belongs. Not that I care about him, but his actions speak volumes. He has other plans with regard to the shareholders. Read his actions. He got his stock for a penny and he owes it to Young. So I do what the money makers and the smart money does-short the stock after a rally that brings in new fools. Most will sell and take their losses after the rumor fails to materialize. It always does. Short and proud. AV