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

To: jim A who wrote (18812)	12/1/1997 5:22:00 PM
From: BP Ritchie	Respond to of 42771

Yep, it's cheap. Dirt cheap, in fact! Novell is not losing market share ... it's user base is growing again, and that user base is on the verge of a major upgrade cycle. This is where Novell seems to be focusing it's attention for the present and is not now trying to compete in most of the areas where MicroSoft is making enormous gains ... particularily in the SOHO and individual purchaser marketplace. Novell seems to prefer their 'bird in the hand' over the entire flock of birds that MSFT is trying to go after ... I think that Novell does need to capture at least some of the 'new customer opportunity'. They haven't shown that they have that capability yet, and seem to be trying to remain 'unnoticed' until they can be more effective. The total potential Networking Software revenue over the next decade is probably in the range of several Trillion (1,000 Billion) dollars, this company has the fastest & most reliable Intel Instruction set based Networking software known to the largest number of potential customers, and from a technical perspective also improving at the most rapid rate ... it's far more valuable than the stock price indicates ... probably in the $10 Billion range. But, ... until now at least, this is at best a poorly performing asset, and until the past year seemed to be disintegrating on it's own. Now it seems that through some pretty good recent technical decisions it's growing again and will soon pose a serious threat to other vendors ... e.g. MSFT. Now, if someone with a lot of money to use to dominate markets was unable to buy the company in the normal way (say because of Anti Trust issues) then I suspect that it would not be difficult for that somebody to arrange for Novell to be destroyed by being 'bought' and dismembered to the point that it not longer posed a threat. The whole 3 Billion wouldn't be required ... only 51% control would be enough to make that happen ... you or I could probably go to Redmond and arrange a loan ... just tell someone there that we intend to sell off the assets in pieces (so that a certain Redmond company could rely on feeble competition) and I bet we could get a $2 Billion loan ... or letter of credit, or 'ghost financing'. And ... $3 Billion to knockoff the current market leader and make all the potential 'fruit' in a Trillion dollar market available isn't very much of a price to pay as an overall percentage. Don't lose sight of the current standings ... in a marketplace of mostly commercial LAN users now and with a potential of being the entire InterNet user base within a few years ... Novell has 55% to 73% depending upon whose estimates you use. Although their growth rate in percentage terms is lower than MSFTs the absolute numbers of net new users are (I don't know the right numbers) probably still larger ... and the next upgrade cycle is just starting now, the numbers will look a lot different by the end of 1998. I think they are very vulnerable to all sorts of mischief right now, and the incentive to try to take them out of the marketplace is growing. This is not the time for them to leave their shareholders feeling like they've been taken for granted and/or fleeced like sheep. I think there are a lot of us that feel the company management isn't really concerned about their shareholders, and is not doing enough to protect and improve shareholder value. Eric Schmidt's answer in the CNBC Sqwak Box Interview (11/26) about what he does with his own money kind of felt like salt in my wounds when I heard it ... and I sure didn't like how it felt. I think it was a significant mistake. I've been holding my Novell shares more because I really want to see the company succeed (and I thought I was helping by not selling & driving down the price) than because I thought it was a brilliant investment ... I do believe that it will ultimately make a profit, but the payday keeps moving further into the future ... basically that kind of feeling is called goodwill, but it's getting close to being all used up (at least in my case) by many shareholders ... and probably someday soon the BOD too.