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

To: Rusty Johnson who wrote (26044)	3/15/1999 9:22:00 AM
From: Spartex	Respond to of 42771

Microsoft Makes Play For Small Firms Date: 3/15/99 Author: Lisa Wirthman For Microsoft Corp., there's nothing tiny about the opportunity to sell networking software to small businesses. As Microsoft's Windows NT networking software gains popularity among large companies, the software giant is searching for new ways to grow the product's sales. So the company is working to improve a slimmed- down version of NT for small businesses. In January, Microsoft announced the second version of its NT Small Business Server, based entirely on customer feedback from its first edition. ''I don't think it's a mystery to any technology vendors that small business represents a tremendous opportunity,'' said Jennifer Cioffi, who oversees Microsoft's small-business products. ''It represents one of the largest untapped markets and the largest revenue opportunities that Microsoft can tackle.'' There are 7.4 million small businesses with 100 employees or fewer in the U.S. today, 1.2 million of which have PC networks, says International Data Corp. of Framingham, Mass. By 2002, 2.5 million firms of that size are expected to have PC networks. Dropping PC prices are enabling more companies to purchase multiple PCs and network them together with software such as Microsoft's Small Business Server, Cioffi says. Also driving small businesses to get networked is pressure from partners and customers to get online, Cioffi says. According to IDC, the percentage of small businesses connected to the Internet is expected to jump to 68.5% in 2002 from 49.8% in 1997. For Microsoft, finding a way to sell networking software to the growing number of small businesses has become a strategic emphasis for the company, Cioffi says. Microsoft is not alone in pursuing the small-business networking market. Rivals such as Novell Inc. and IBM Corp. also are targeting small companies. But Microsoft claims it alone is making the investment to find out what makes small companies tick. Through market research, Microsoft is finding most small businesses buy software from some type of consultant, Cioffi says. That means Microsoft has to change the way it traditionally sells its software, through direct sales forces. Figuring out how to sell to little companies has been a process of trial and error, says Nigel Burton, the director of Microsoft's sales program for small consultants. Microsoft discovered small firms bought software from different resellers than the ones it originally targeted, he says. ''We found that given a choice between a solution provider 10 miles away or a guy with a screwdriver in the building next door, a small business would choose the latter,'' Burton said. ''That was a flaw in our plan.'' Small businesses typically turn to small consultants because large resellers don't pay attention to them, Burton says. It's a homespun network in which consultants often go to the same churches or have kids in the same little league as the business owners. ''It was a dilemma for us,'' Burton said. ''If we aspired to have a significant market penetration with small businesses in every town and city in America, the only solution was to have a partnership with every small-business reseller - about 300,000 companies.'' Microsoft decided it had to meet those consultants making purchasing decisions for small companies. ''We couldn't be some big anonymous software corporation,'' Burton said. ''We had to be in their city shaking hands with them.'' Microsoft gave district sales offices and foreign subsidiaries funding to book a big hotel once a quarter. There they could do sales presentations for area small businesses. Along the way, Microsoft discovered a key obstacle for small-business buyers, Burton says. Microsoft's fees for technical support were hurting small consultants' bottom lines. Unless they could pass along support fees to customers, consultants would lose profits from software sales, Burton says. Microsoft decided in October to invest $30 million to increase small-business sales and support programs. Consultants now get free technical support from Microsoft around the clock, Burton says. Burton claims Microsoft's efforts are distinguishing it from competitors. ''It's not like we're bumping into competitors as we go to Portland, Ore., or Pine Bluff, Ark.,'' Burton said. ''And there's no other way to reach very small businesses.'' Microsoft also began updating its Small Business Server based on customer feedback as soon as the product shipped in October 1997, Cioffi says. The second version of the software makes it easier for consultants to tweak the product to fit individual customers' needs, she says. Other changes include tools that make it easier for consultants to remotely fix customers' problems via the Internet, she adds. As a result of its investments, Microsoft's sales of Windows NT software to small businesses have grown 50%, Burton says. Microsoft won't reveal numbers, but Burton says he expects sales of the product to be more than $1 billion in the next three years. ''We've easily recouped our investment,'' Burton said. ''The business opportunity here is huge.'' (C) Copyright 1999 Investors Business Daily, Inc. Metadata: MSFT NOVL IBM I/3270 I/3574 I/3572 E/IBD E/SN1 E/TECH

To: Rusty Johnson who wrote (26044)	3/15/1999 9:28:00 AM
From: Spartex	Read Replies (3) \| Respond to of 42771

Magic 25 Mar 15, 1999 Novell's NDS 8 In Open Beta-Testing Novell (NASDAQ:NOVL - news) announced that its Novell Directory Services (NDS) 8 is in an open beta-testing phase. Why is this important? This product is a next generation scalable Internet directory. NDS 8 will improve reliability and security, and enable more users to integrate more Internet standards and network devices than earlier versions. Essentially it is the framework or vehicle for electronic commerce. Preferred Capital Markets analyst Joel Achramowicz, recently said "this race for directory supremacy is Novell's to lose. But the release of NDS 8 is certainly an important tool that will help Novell to stay on top of the directory market and continue to be a leader, and innovator." Achramowicz then went on to question why the market is not valuing the company as a play on the Internet. This is a valid question. Consider that directory services product sales are estimated to be $5 billion by 2000. In our minds the reason that the stock is not enjoying the pie in the sky valuations that some of the pure play Internet companies are receiving is because we don't think that investors are fully aware of the size and importance of a scalable directory market. (=;-) -- won't be long!) Novell is expected to outline the future direction of NetWare at the annual BrainShare conference in Salt Lake City, Utah from March 21 to March 26. Two products to be discussed at BrainShare will be 6 Pack, and Modesto. 6 Pack will incorporate NDS version 8 and will optimize server management capabilities. Compaq (NYSE:CPQ - news) is expected to show off its 8-way server technology at the conference. Compaq's product will be combined with and use 6 Pack's performance benefits. Modesto is a "next generation" 64-bit operating system designed to run on Intel's (NASDAQ:INTC - news) future IA-64 processor family. In short, we continue to believe that Novell is on track to earn $0.48 per share in fiscal 1999 and think the release of version 8 is an important stepping stone in making investors and analysts aware of the company's Internet applications. Bottom Line: While we do not think that the stock will receive a dot.com valuation in the near-term, we are confident that 1999 will be a year in which shareholders will be handsomely rewarded for their patience. Analyst: Glenn S. Curtis Updated 3/12/99 with NOVL trading at $24.13. Recommended on 11/16/98 with NOVL trading at $14.38 fnews.yahoo.com