● 06.01.07
●● Between the Lines Talks About Splitting Novell
Posted in Finance, Identity Management, Novell at 11:26 pm by Dr. Roy Schestowitz
This one particular suggestion comes as a total surprise and whether it makes any sense or not, well… it is you who ought to be the judge.
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I’m left to conclude that the strategy, not the products, is the problem. Frankly, I see little synergy between the identity products and the rest of Novell. As a consequence, they’re probably holding each other back as executives struggle to manage and resource two very different businesses. Novell’s shareholders would be better off with two Novells: one focusing on their identity business and one concentrating on Linux.
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Novell already considers buybacks, according to Ron Hovsepian. Structural remedies can be another route to take, even though it seems far fetched. While the company operates at a loss, some action — any action — needs to be taken.
A day after Jim Yin rated NOVL “strong sell”, another analyst weighs in.
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Novell “underperform”
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Analyst J Maynard of Credit Suisse reiterates his “underperform” rating on Novell Inc. The target price is set to $6.
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In a research note published yesterday, the analyst mentions that the company’s 2Q results did not indicate any visible signs of substantial progress. The forthcoming release of GPLv3 represents a risk to Novell’s most significant business, the analyst says. In the absence of sustainable cash flows, the probability of the company being acquired by a private equity investor is quite low, Credit Suisse believes.
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No matter how you look at this, attempts to turn a loss into a perceived win will not work for Novell here. Novell has tried to play that card. There is another item which is by no means encouraging:
Novell Q2 2007 Results: Still a long way to go
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Novell yesterday announced financial results for its second fiscal quarter ended April 30, 2007. Net revenue went up 2.6% year on year to $239 million with software licensing increasing faster (4.1% to 17.4% of revenue) than maintenance (up 2.2% of revenue to 52% of revenue) and service revenue (down a whopping 37% to 31%).
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What will it be next? A split seems unlikely, but it’s the first time the idea gets mentioned. Only a couple of weeks after an analyst mentioned buybacks as an option, Novell did as well. Everything seems like a possibility, provided arguments like BTL’s are used for backing.
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