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

To: Paul Fiondella who wrote (20395)	2/27/1998 8:17:00 AM
From: jad	Respond to of 42771

Is Novell The Rodney Dangerfield Of Internet Software? By Steve Harmon Senior Investment Analyst Internet.com "Where Wall Street Meets The Web" Dear Eric (CEO of Novell): If Novell (NASDAQ:NOVL - news) , with the world's largest installed base of networked users at 70 million, had half the marketing finesse of startup Marimba, a company with few users but plenty of media exposure, then perhaps the stock would take its place among the leaders in the software space. Of course sales and earnings growth would help much more. For despite having one of the best minds in the Internet space--Dr. Eric Schmidt (who was Sun Microsystems chief technology guru before joining Novell last April)--Novell just doesn't seem to yet get the kind of respect on Wall Street that rivals with one-tenth the products and 1/100th the experience receive. In April 1996 NOVL shares were slightly more than $15 each. February 26 they closed at $10. Our analysis shows the $1 billion cash brings the value any acquirer would effectively pay to be equal to $6.73 per share. That $1 billion might lure a hunter. The latest: Novell By The Numbers Novell NOVL (millions) Shares out fully-diluted 352.97 Price 02.26.98 $ 10.00 Market cap $3,529.71 Less working cap $1,155.06 Plus long-term debt nil = Enterprise value $2,374.65 Enterprise value per share $ 6.73 1Q to 01.31.98 sales $ 252.04 Vs. 1Q97 sales $ 374.85 Percent difference -33% Net income 1Q98 $ 14.09 Vs. 1Q97 net income $ 50.81 Percent difference -72% 1Q98 EPS $ 0.04 Fiscal 1997 sales to 10.31.97 $1,007.31 Fiscal 1996 $1,374.86 Percent difference -27% Net income 1997 $ (78.30) Net income 1996 $ 71.04 Percent difference -210% Net income without charge $ (23.30) Percent difference -133% c 1998 Mecklermedia share prices in $ For full fiscal year 1997 ending October, Novell posted about $1 billion revenue and a net loss of $78 million or ($0.22) per share. The company's third-quarter restructuring charge of $55 million contributed ($0.10) per share, after tax, to the loss. Notably, a $150 million loss before taxes. Sales dropped 33% in the first quarter ending January 31, 1998 vs. 1Q97 even as Novell squeezed out $0.04 earnings per share, a sign of internal cost cutting. It's perhaps a message thing. Novell seems to have all the right stuff: products, installed base, strong technology but soft sellthrough vs. the past and in spite of reporting more users...In 1996 Novell software users stood at 55 million users of NetWare or related applications. Today it's more than 79 million--Microsoft, Netscape or Sun drool at the prospect and spend millions to try and get just to that point. Since 1996 Novell's been chanting Vint Cerf's favorite ZENism "Internet Protocol (IP) on Everything," taking the formerly proprietary NetWare into more open TCP/IP waters. Novell's aggressive move to NetWare 5 affirms that strategy with its built-in Java Virtual Machine, objects and 'not even Microsoft can touch this' leading edge directory services. Yours is the no-brainer, easy to manage. With NDS you can manage the entire intranet environment click, click, click. But it hasn't yet with investors, the same ones that push Microsoft (NASDAQ:MSFT - news) to $200 billion market capitalization at the same time Microsoft wants to be Novell in the network space. Blip us with an e-mail to stocktalk@internet.com on what you think about any Internet stock or investment you've seen or heard about to. Send us your rants, raves or ramblings and they may be included in this column in a special feedback edition every week. Throughout the trading day be sure to check Internet Stock Report's index of leading Web companies, the ISDEX, Internet Stock Index, for a roundup of how Internet stocks fare minute to minute. Archives: [ Fri Feb 27 \| Thu Feb 26 \| Wed Feb 25 \| Tue Feb 24 \| Mon Feb 23 \| more ] Mentioned_Here MSFT NOVL 85 1/2 10 0 0

To: Paul Fiondella who wrote (20395)	2/27/1998 8:45:00 AM
From: Spartex	Read Replies (1) \| Respond to of 42771

OK Paul: Let me be clear too, fundamentals do make a very important part of underlying strength in todays market. You'll see VLSI plop today as they will miss this quarter badly. Hence, an Asian effect weakening their nearterm fundamentals. meanwhile, the jury is out whether NOVL is being pushed by MM or fundamentals. I believe it is a mix, with fundamental buyers having the upper hand, as many were accumulating in the 7-8 dollar range. These buyers are very shrewd on the fundamentals of NOVL. while some MM may be coming in the past few days, I believe others (fundamental hunters in todays rich market) are waking up to the value of NOVL. the fundamentals that appear not to support NOVL today (IYO) will win out IMO. Regards, Quad-K