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

To: Don Earl who wrote (22235)	5/22/1998 5:32:00 PM
From: Paul Fiondella	Respond to of 42771

The Numbers Revenue by Segment Q3 Q4 Q1 Q2 NOS Net3 10.025 27.952 22.236 28.997 millions 11.1% 10.4% 8.8% 11.1% % of rev Net4 28.18 128.976 125.822 119.964 31.3% 47.9% 49.9% 45.7% Total 38.205 156.928 148.058 148.961 42.4% 58.3% 58.7% 56.8% Network Services Tuxedo TCP/IP Access Bordermanager NDS 8.252 27.888 32.400 28.346 9.2% 10.4% 12.9% 10.8% Groupwise Managewise 15.719 35.801 35.482 43.976 17.4% 13.2% 14.1% 16.8% Total 23.971 63.689 67.882 72.322 26.6% 23.6% 27% 27.6% Other UNIX 7.359 9.731 7.127 6.904 8.2% 3.6% 2.8% 2.6% Education Services 20.539 38.935 28.975 34.083 22.8% 14.5% 11.5% 13% Total 27.898 48.666 36.102 40.967 31% 18.1% 14.3% 15.6% Total Net Revenue 90.074 269.283 252.042 262.250 ============================= On the Plus side: Net 3.2 upgrades for legacy systems making them Year 2000 ready are likely to increase this category of NOS revenues (finally!). Novell says that it's studies show that 80% of the installed base will move to IP in the next two years. Schmidt claims that there is pent up Internet demand. Reason --- to move their internal data to Internet accesibility. The first significant indication of Novell's share of this market will be with Net 5. The new CFO claims he will cut Novell's general and administrative expenses to the industry average. On the negative side: There is no evidence to date that any of the potentially hot products, like Bordermanager and NDS For NT --- the network add on products --- have contributed anything significant to revenue. The company that claimed it would be the Internet leader failed to mention any web server generated NOS revenues in its conference call. Current management appears to be betting the company on the Netware 5 release. (Its IP!) They appear to be counting on NT5 being late. They are discounting the MSFT FUD factor (Schmidt's special relationship with Gates?) Will the Justice Department expand its inquiry to NT? (I've heard nothing about that NDS threat earlier this year doing any harm to MSFT) There is no evidence that they have cut costs significantly from the last quarter, in fact their G&A went up. The last downsizing was the only significant cost reduction (about 30 mil). They will have to increase expenses with Net 5's release. There are no small business versions of Netware 5 planned for the Netware 5.0 release. The focus therefore is on the enterprise and the installed base and selling the new NOS to them. Opinion: It doesn't take a rocket scientist to figure out that the "new" Novell is just like the old Novell, pursuing the same strategies. If Eric has a vision, it hasn't shown up in the products. IP was not his vision. He has nicely rearranged the deck chairs on the Lusitania and chastised the crew for not painting the deck a nice bright white color that any warship can see---but out there in the murky depths is Bill Gates with his torpedoes ready to blast the company to hell.