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

To: ToySoldier who wrote (22632)	6/12/1998 1:01:00 AM
From: Craig Dean	Read Replies (1) \| Respond to of 42771

Dear Toy Soldier, The correct installed base percentage held by Novell is 22/32 = .6875 or 68.75% and Microsoft is 10/32 = .3125 or 31.25%. I am sorry about the mistake. Does this appear accurate?

To: ToySoldier who wrote (22632)	6/12/1998 1:40:00 AM
From: Craig Dean	Read Replies (2) \| Respond to of 42771

Ok Toy Soldier, Here it is, the revised veersion. By-the-way, IBD was definite about the total installed base being 32% of these companies. Maybe the remaining 68% use tin cans with string and shoe boxes for filing. <<I read page A 11 of the 6-10-98 issue of Investors Business Daily. The article was regarding small business networking systems. The market for network operating systems for business for business of 100 employees or less is serviced by two players, Microsoft and Novell. According to International Data Corp, IDC 32% of these small business use network operating systems. Of the 32%, Novell has 22% and Microsoft has 10%. It is estimated that 1.6 million business have installed networks. This number is expected to triple by the year 2000. That's 1.6 mil x 3 = 4.8 mil 4.8 mil - 1.6 (current bass) = 3.2 mil Now here is where it gets interesting. Novell has 22% of a 32% instaled base market. That is .22 / .32 = 68.75% Pretty impressive huh? Wait, it gets better. There are 3.2 mil more networks to be placed by year 2000. If Novel can hold on to its "68.75% share," they would have 2.2 mil more installed networks. Heres the math 2.2 x .6875 = 2.2 mil. Note: The minimum price for a 5 user Novell network is about $1000 plus $55 per each additional user. For Microsoft, it is $1500 and $300. Clearly a significant cost advantage to run with Novell. So here is the really good stuff. Novell acquires 2.2 mil more placements at a minimum of $1000 per placement. That's 2.2 billion with a B dollars. Say 20% of that number drifts to the bottom line. That is 2.2 bil x .20 = 440 mil. Now after the 10% stock repurchase. the float should be 320 mil shares. So, $440 mill / 320 mil shares = $1.375 per share earnings $1.375 x a PE of 20 = $27.50 share price $1.375 x a PE of 30 = $41.25 share price Let us not be so bullish and say that instead of the 68.75% market share, Novell secures 20% less than 68.75%. We can plan on the following numbers: $1.375 x a PE of 20 = $27.50 share price x .80 = $22.00 share price $1.375 x a PE of 30 = $41.25 share price x .80 = $33.00 share price The moral of the story is that the best is yet to come, and very soon. Now, please tell me where there are any holes left in this analysis?