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● 08.28.07

●● Novell’s “Underperform” and SCO’s Cash Injections That Brought Its Demise

Posted in Finance, Novell, SCO at 11:08 pm by Dr. Roy Schestowitz

Novell has just nailed and announced a big contract in Germany, but as usual, we’ll post that on Saturday. In the mean time, let’s look at Novell’s financial situation. It does not look as encouraging as Novell needs you to believe. We wrote about it yesterday, but here is the very latest.

=> ↺ wrote about it yesterday | ↺ the very latest

In a research note this morning, Credit Suisse’s Jason Maynard repeated his Underperform rating [on NOVL], asserting that he is “not expecting to see material improvements in the business.”

[...]

He notes that the company has over $1 billion in net cash, but says that “Novell is more likely to use that balance to make acquisitions rather than buying back stock.”

One company that has been buying back stock very aggressively is Microsoft. This has gone on for over a year and it helps the company keep up appearance. Novell, on the other hand, bought a company last week, so its expanding in terms of scale. This was its plan, as Ron Hovsepian’s outlook made evident.

There is another new bit on SCO, which comes from the MSNBC-affiliated Motley Fool.

=> ↺ new bit on SCO

SCO essentially attempted a costly, time-consuming “Hail Mary” to score a big payday. It might have better spent that time building products and getting customers. What’s more, it picked fights with big-name tech players who know how to wage a court battle.

“Big payday,” eh? Where have we seen that more recently? 348? 228? 235?

=> ↺ more recently | ↺ 348 | ↺ 228 | ↺ 235

The article closes with the following paragraph:

As of now, SCO’s shares are trading at $0.51 apiece, and the company sports a market cap of a measly $11.5 million. It’s definitely a sobering example. Foolish inventors looking at companies with similar strategies should realize that they’re more like lotteries than businesses.

Let’s wish Novell some better luck.

=> ↺ better luck

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