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

To: michael c. dodge who wrote (20214)	2/20/1998 2:11:00 PM
From: Joe Antol	Respond to of 42771

Hi michael: Oh yes, I know <s>. Re: your last sentence - Caveat Emptor, IMVHO. Regards, Joe...<I truly hope I'm proven wrong. But as I said I would do mike in 97', i.e., not own it in 98' --- I did, and made out a lot better short term with the DELL's, ORCL's, and CPQ's of the world. Whatever....>

To: michael c. dodge who wrote (20214)	2/23/1998 4:42:00 PM
From: Salah Mohamed	Read Replies (3) \| Respond to of 42771

Hi Michael...About Novell Prospects >>Is there any reason to think the recent small move is anything other than a head fake ???<< The short answer is 'NO', and here is a very long explanation: ********************************** 1. Wall Street (WS) does not think there is a turnaround in the foreseeable future according to the EPS estimates for 98 and 99. Here is a summary of WS recommendations and estimates: ------------------------------- Number of brokers recommending as: Strong Buy: 2 Moderate Buy: 2 Hold: 7 Moderate Sell: 0 Strong Sell: 1 Industry:COMP-NETWORKS Ranked 42 of 58 Earnings Per Share Last Quarter (Oct 97): 0.02 Surprise: 0% Consensus Estimates This Quarter (Jan 98): 0.02 This Year (Oct 98): 0.17 Next Year: 0.31 Last updated: 17-Feb-98 quote.yahoo.com ------------------------------- My comments: a. Estimates for Q1-98 of 2 cents sound reasonable to me. According to the company guidance, here are my estimates for Q1-98: Revenues: 365M Total Expenses: 370M Other Income: 13M Income before Taxes: 365+13-370 = 8M Income Taxes: 2.5M Net Income: 8-2.5 = 5.5M Shares: 352M EPS: 5.5/352 = 0.02 b. Personally, I don't consider EPS of 0.31 for FY-99 is a turnaround, this is stagnation, at best. They were making about that much in one quarter in 95. I still say that around $9 this stock is fully valued, this is about 30 times next year EPS and about 3 times current sales. Of course this is assuming that they will meet these expectations, and their history is not assuring though. One might want to argue that this is a strong turnaround since the EPS will be growing at 82% (31/17-1), and the stock deserves a better multiple than 30, my answer to this is 'that is what makes a market'. ******************************** 2. Eric Schmidt didn't prove that he is a great CEO. a. His waffling about the turnaround schedule is pathetic, is it April 98?, December 98?, or 2 to 3 years from April 97?. I don't think he knows. b. He badly missed Q2-97 pre-announced numbers, and Q3-97 numbers were way below company guidance. c. Frankly, I don't see much difference between him, Frankenberg, or Marengi, same management attitude, they don't care about shareholders. d. After the disastrous interview on CNBC about Q4-97 results, he totally disappeared, no more articles about him or interviews, I guess the honeymoon is over, WS wants to see results not talk. ******************************** 3. The main nagging problems haven't been solved. a. Inert BOD b. Lousy marketing and PR c. Lack of simple and clear vision as evidenced by the latest drastic change in their NDS strategy ********************************** BTW, I'm not bullish or bearish, I don't own the stock and I'm not short. It is one of the many stocks that I follow. and Fred Smart ... I'm here. Regards Salah