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

To: ToySoldier who wrote (24554)	11/26/1998 3:35:00 PM
From: DJBEINO	Respond to of 42771

Novell Upgrade Plan Irks VARs By Lee Copeland Provo, Utah .............. With the holidays only weeks away, Novell Inc. VARs are putting upgrade protection at the top of their wish lists. Several Novell VARs say the company is again sending mixed messages to its channel, this time by selling upgrade protection direct to noncontract customers while the same upgrade protection program is not open to resellers. Last summer, Novell offered two-year NetWare 5.0 upgrade protection direct. It now appears Novell has extended the program to include products besides NetWare, such as GroupWise, BorderManager and ZENworks, according to VARs familiar with the plans. Two years of upgrade protection on GroupWise is $48 per seat and ZENworks is $13 per seat, VARs said. Available through Novell's Rainmaker inside sales group, the upgrade-protection offer includes any additional point or numbered version released during the next two years, VARs said. Some VARs believe Novell wants to circumvent resellers that sell rival Microsoft Corp.'s Windows NT as well as NetWare. "Our primary source of revenue is services. We resell value and time, so we make a good effort to contact customers," said one NetWare Gold reseller. "We believe strongly in Novell's product. But we sell both products and believe they both have a place. Our charge is to make NetWare and NT work in the right environments." But Novell executives said these VARs are missing the forest for the trees. "What we're doing is trying to accelerate the growth of adoption of new technology through a high-touch phone campaign to reawaken the 3.x marketplace," said Chuck Meister, vice president of U.S. field sales at Provo-based Novell. Novell's goal is to contact dormant customers, he said. Novell will offer VARs a 5 percent commission on its direct telesales whenever the customer names its reseller, Meister said, adding that the Rainmaker group will turn over service leads to VARs. Last week, Novell sent out direct mailings introducing the upgrade-protection program to customers, further irritating VARs. "I don't know how they got in touch with my customer," said a Novell Platinum reseller. Asked what Novell could do to remedy the problem, the reseller replied: "I want an SKU on upgrade protection for noncontract users." Novell's largest VARs may sell maintenance now, Meister said. Similar to upgrade protection, maintenance is available to Master License Agreement (LA), Corporate LA and Volume LA customers that commit to purchasing $500,000, $100,000 and $10,000, respectively, of Novell products. Novell will open the maintenance program to VARs in February, he said. Rick Gunther, vice president of ASAP Software Express Inc., Buffalo Grove, Ill., said many customers are buying maintenance right away "because there is a long-term commitment to the product." The glitch comes when NetWare 5.0 business is booming, resellers said. Howard Diamond, chief executive officer of Corporate Software & Technology, a Norwood, Mass.-based reseller, said Novell sales numbers have "taken a huge jump" since NetWare 5.0 shipped. In fact, Novell delivered better-than-expected results for its fourth quarter ended Oct. 31, 1997, posting a $42 million profit on sales of $298 million. "Our strategy is clearly working," Eric Schmidt, Novell chief executive, told analysts on an earnings call. crn.com

To: ToySoldier who wrote (24554)	11/27/1998 10:12:00 AM
From: dwight vickers	Read Replies (2) \| Respond to of 42771

Very big issue with companies like MSFT. I saw a report that stated that something like 80% (it's been a while) of MSFT's earnings in 1997 would have been offset by what it cost them to buy shares in the marketplace, to fulfill employee option obligations. And other tech companies were in similar situations. Why is it important? Think about it. The wealth created for the shareholders is being spent to buy full priced shares in the market, to sell to employees for less than market value. NOVL winds up with the same amount of liquid assets after spending hundreds of millions to buy back shares. And potentially has the same number of shares outstanding. Or more at some point? "Earnings" are reported where none exist because of this expense. Investors run the stock up because of said "earnings". But the company continues to create no new value. Keep in mind that in bull markets nothing is a problem. LTCM wasn't a problem until the market started to drop. But shareholders start to look for "explanations" when things turn down. How about if earnings go to hell at some point, but there are still millions of options in the money that employees rush to exercise. Losses reported and cash on hand declining? I don't want to exaggerate the problem, but the articles I had read said it was a serious problem that was being ignored totally. With the "fully diluted shares" issue at NOVL, as described by others, it may take a while to see what has really occurred. But the bottom line to me is, if you are buying in shares with your (shareholders) cash, but total shares do not decline.......... Dwight