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

To: E_K_S who wrote (20344)	2/26/1998 12:35:00 PM
From: Frederick Smart	Read Replies (1) \| Respond to of 42771

Posted from MF: Gosh, I guess I overslept a couple days. Seriously, I have been watching sentiment more than anything. While we can all feel a bit better about Schmidt pulling 4 cents out of the hat, we don't need to give the store away as far as sentiment goes. Reasoned, balanced, objective opinion and analysis is what every investor needs to work on to hold any stock for the longer term. I wrote a very long piece in response to Salah, the bear sage over on SI - but my computer when into default - you know I almost felt Bill himself in that moment. The bottom line for those that still endeavor beating the bear drum is that its old news. Here's my quick take (if someone wants to lob this over to Salah at SI feel free...): 1) Revenues have stabilized - I was expecting more - high $260's, but I'm not dissapointed. A full $12M came from the weak sisters in Asia - with new orders and strength balancing this going forward from China - big orders - K Lampur; Singpore (the Petrona Towers (sp?) will be networked throught an exclusive with Novell - not bad. Even against this Asian draft we have NOS sales at $148, down just slightly from Q4's $157. 2) For the first time Novell broke out sales from "new" customers: a full 68% of the $126M came from new clients buying new products as opposed to existing client upgrades which accounted for 32%. This on director platform sales of $126 vs. Q4 $129. Decline? Wash out? Far from it. This is a solid stable trend when you factor in Asia. 3) Licensing sales were slightly higher - $138M vs. $135. I expect these to pick up in the months ahead. 4) Education sales declined $10 to more normal levels reflecting the seasonality of this stream - Novell's technology infrastructure for education sales has tremendous potential to make grow new revenue streams going forward. 5) THE "sleeping" SURPRISE award: booked NDS for NT and new product related sales of $6.5M for less than one week of shipments - they rolled this out late in the year. Someone correct me, but this would imply a new $84+M quarterly revenue stream - and this is without even talking about the really hot and exciting "native" NDS for NT due to ship this summer. I need to clarify this number further before throwing swords against the bears out there. The final adjusted number may be 50% of this on a basic feel, but the trend is going in the right direction. Against a larger backdrop, this number could dovetail with the the nice trend of seeing 63% new clients as noted above. 6) Border Manager sales were not broken out, but based on my read and feedback, much of Q4 and Q1 was spent "educating" the client base. This investment in time and education is really beginning to pay off as witness by the great press reviews and many awards the European have already given to the product just in the past few months. Border Manager revenues are going to really expand going forward. This is another nice forward looking element they really don't like to talk about. The U.S. West announced deployment of BM is a gigantic mindshare, future marketshare building event. 7) Accellerated deployment of new products coupled with positive reviews and feedback. Just look at the last several weeks worth of new announcements, new products. Novell has definitely turned the corner along several fronts. Far from declining and shying away, I see, feel and believe that a huge awakening is at hand. 8) Is was nice to hear Eric mention their Orion Clustering technology - the successor to Wolf Mountain - is coming on schedule - due by the end of the year. 9) Expenses are well under control: $15M decline in research & dev.; $5M decline from shutting down outsourcing contracts and controlling admin costs. They are keeping sales and marketing level - which combined with their recent consolidation and reorganization last quarter will allow them to leverage their investment in this area even more. The results and conference call confirmed we have a "new" Novell in the making. There is a sense of mission, excitement and momemtum in the air. The shorts would be well served to scale back their positions. Yesterdays volume was positive despite the pullback. I would use delcines to continue to add to what for me is an attractive long term commitment. Good luck! Final comments: I won't go tit for tat with Salah for, while I respect his thoughtful analysis, there is a more fundamental matter in all investors minds: sentiment. Sentiment drives markets in ways that have nothing to do with real-world fundamentals. My central point to buying into Novell was to ride the surviving turnaround horse in this incredible expanded markets for networks of all types, etc. I regard Novell as being uniquely positioned to adapt and change to take advantage of the exciting opportunities I see for the coming world of "smart bandwidth" - no pun. You'll start to hear more and more about bandwidth - this and that in the days and months ahead. In the coming information technology infrastructure revolution, there is an optimal state - which I will defer my definition on for a moment - when intelligense, information, technology and capacity meet to form the value-added information fueled world that will radically change the way ALL businesses interact with their clients. We got a revolution on our hands and I'm happy with Novell's position as a leader going forward. Hate to trouble the bears, but we just ain't going to be riding this wave exclusively on Gate's "Digital Nervous System." Shoot me Paul!! Good Luck!

To: E_K_S who wrote (20344)	2/26/1998 3:24:00 PM
From: Don Earl	Read Replies (1) \| Respond to of 42771

Hi Eric, Yep, it broke out, which I truly did not expect considering the selling pressure from yesterday. The chart looks a lot more solid going forward after it pulls back some than it did. There's an item about Microsoft and Novell under one roof in the news section. It's about a book on how to integrate the two systems but I suspect the rumor mill is at it again. As if the government would approve that kind of transaction even if Novell was for sale. One of those unpredictable events I spoke of. Regards, Don