● 05.15.08

●● Novell’s Buybacks Not Enough, Says Analyst

Posted in Finance, Novell at 5:37 am by Dr. Roy Schestowitz

Further privatisation required

Yesterday we wrote about Novell's new buyback program. There are some more reactions to it now. Sarcastically, for example, says the following guy: “Novell finds someone willing to buy $100M worth of its stock.”

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In January, Jefferies analyst Katherine Egbert predicted the buyback when she raised her rating on Novell stock from hold to buy and jacked her price target 50 cents to $7.50

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He also refers to this post, which comes from one of the most pro-Microsoft publications out there (probably second only to Motley Fool/MSN).

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Katherine Egbert, an analyst at Jefferies & Co., notes that the buyback is “unlikely to move the EPS needle, even if executed quickly and entirely.” She points out that the company has about $1.8 billion in cash on its balance sheet, or about 78% of Novell’s current market valuation of about $2.3 billion. (Net cash is around $1 billion.)

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Then again, Katherine Egbert’s guesswork typically has it wrong. █

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