Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: PJ Strifas who wrote (26026)	3/12/1999 10:20:00 PM
From: Paul Fiondella	Read Replies (3) \| Respond to of 42771

Whither NOVL First of all the shock, absolute shock to my system of seeing NOVL move up to $24-26 a share has made my brain mush. I guess it's like what a younger person would feel when they are in love. I'm just too busy singing to myself and daydreaming to think rationally. The positive factors -1- Modest projected growth in earnings going forward while the other techs are preannouncing shortfalls. -2- A definite internet strategy shaping up to move the company beyond enterprise sales into the world of the internet and e-commerce. Upside surprise factors -1- Higher adoption rates: The possibility that Netware sales will really move up in either of the next two quarters due to the acceptance of Netware 5.0 as a necessary part of any enterprise NOS strategy. -2- The possibility that MSFT will promote NDS if it starts to see NT sales falling off. -3- The effect on the stock of the 10 Zens to be announced at Brainshare. Watch the press and see whether they rediscover Schmidt's pledge to make Novell an internet leader. -4- The continued takeover rumors. As outlined here several years ago, once Novell established native IP and a successful presence in the internet realm irregardless of what the company itself feels about being bought out, there is just too much to be gained from companies buying future sales by buying Novell. This always happens as profits trail off. All companies look to invest their capital productively. While they can increase production and the development of internal products, they spend the money internally. When they can't sell as many products, they cut back on internal investment and go hunting. Novell like it or not is going to be mentioned again and again as it gets its internet strategy working better and better. It's cheaper to buy Novell than to do what Novell is doing internally. Watch those "directory" projects fail and fail to catch fire. The final factor with regard to the possible buyout is the fact that most tech companies have split their stock to the point where they can easily afford to absorb NOVL --- PAINLESSLY. (Even cheapskate McNealy) Downside factors -1- Valuations are getting high. At $.50 and $25 we are 50 to 1. -2- Outside influences --- The stock market itself is resisting going to higher valuations with earnings worries now a part of investment house strategies (they are coming down to earth). After they come down to earth on the highest flyers, they will do the same for every other stock. (We are early i nthis process.) ================== I'm probably going to exercise my March calls and take the stock --- since I have no stock (this is a tax strategy). I think there will be a run up if they really show the press what they have at Brainshare. We could break 26 at that point. If the stock gets in the 26 -30 blowout range, I will sell some calls and buy some puts but keep the stock as a long term hold. I don't see Novl getting lower than 15-16 even in an October like situation. And I don't dismiss the logic of a buyout at some point especially given that the BOD made a real mistake not taking one from IBM years ago and may have learned its lesson to listen to reasonable offers. =================== The usual caveats apply. This is not investment advice, just my opinion. Make your own decisions about your investments carefully. It's your money that you lose.