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

To: Bald Man from Mars who wrote (20737)	3/5/1998 10:42:00 PM
From: Jim McCormack	Read Replies (3) \| Respond to of 42771

95-97 Revenue Breakdown and Thoughts for 98 95 95 95 96 96 96 96 97 97 97 97 98 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Educ 41 41 ? 41 35 39 36 32 32 20 * 30 UNIX 22 20 ? 31 18 18 12 10 9 8 * 6 Netware 244 295 ? 230 65 216 243 253 169 39 * 155 Net Svs 77 93 ? 93 49 92 94 80 63 24 * 40 Totals 384 449 ? 395 167 365 385 375 273 91 250 231 So there it is.... I see sales as flat - if Novell is lucky - All the new products are out and they are not selling. Sales are about 250 a quarter now but that will drop as people delay purchases as they wait for Netware 5.0 in my opinion thats why I got 155 for Netware and an overall total of 231. I'm open to discussing the numbers. We do have a very serous problem however. The fact is that the "Sell Through" is not tied to how much Novell will "Sell Into" the channel. We have seen them over sell the channel 2 times in 8 quarters. They can not, it appears, accurately forecast demand at the end user level. They continue to over sell the distribution channel and have to "Work Off" excess supply by holding sales for a quarter or more. What is the Channel worth? We can analyze the products if you like but the historical shipping into the channel has been way off - they claim in Q2 they held 110 million back. The quarter came in at 273. The next quarter it comes in at 91. Remember they began shipping again after the last exercise in 96-q3, and went on to ship in 96-q4, 97-q1, 97-q2 (Minus 110 million). Now they stop and blow off the excess and sales go to 91 million from a normal run rate of 350-375. That means they had 110 million extra they worked out in 97-q2 and 350-91=260 they just completed working out (Eric said the Sell through was 250 million so we still track each other)for a total of 370 excess "Sell Into" the channel. The 350 run rate is conservative it is higher. What it means to me is that It took 5 quarters to get the revenue right and it was 370 million "Extra" in the end. So lets take the last 5 quarters revenue (365+385+375+273+91) 1489 and take out the "Extra" 370 and get 1189 and divide that by 5qs to get 223 I say last quarter they stuffed the channel and next quarter they will have to do it again. I'll give Netware a bit of a boost so it runs at 155 so I'm calling for 231 next quarter - If they stuff they can get any number they want of course ... Do you trust them or will they "Adjust" the channel for a third time? Jim