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Posted in Finance, Microsoft, Novell at 6:20 am by Dr. Roy Schestowitz
Summary: More information about Novell’s alleged intent to sell parts of the business
IT is important to remember that Novell is in debt and back in 2006 Novell had a choice between going out of business or becoming a vassal of some other company like Microsoft. Novell chose the latter route by going to Microsoft with patents on the table. After prolonged negotiations and a discriminatory deal ready for signing, Novell also received hundreds of millions of dollars in almost-immediate cash infusion, in return for favours. This way, Novell could live for a while longer, so essentially, Novell ran to Microsoft for rescue.
=> Novell is in debt | back in 2006
According to Ovum, Novell’s latest results “disappoint”, despite claims to the contrary from Novell. We have already explained why this is the case, but here is Ovum’s take:
=> ↺ According to Ovum | explained why this is the case
Novell sheds more light on its profitability, but disappoints[...]At the end of May 2009 Novell released the results of its second fiscal quarter 2009 (ended April). Revenue growth was more disappointing than in the first quarter, especially for the System and Resource Management (SRM) business unit and for the GroupWise email platform. However, profitability remained steady. More interestingly, Novell disclosed that two of its four business units, Open Platform Solutions (OPS – in charge of Linux) and Identity and Security Management (ISM), are not profitable yet but should become so within the next 12-18 months.
Reuters published an important article about an analyst from JPMorgan Chase & Co. He spoke to Novell’s CFO and here is a report from Bloomberg which precedes that of Reuters. This comes amidst times when Novell is trying to buy back debt.
=> ↺ a report from Bloomberg | ↺ when Novell is trying to buy back debt
Novell Inc. (NOVL US) jumped 10 percent, the most since Nov. 24, to $4.68. The second-largest U.S. seller of Linux software may be willing to sell itself to boost shareholder value, JPMorgan Chase & Co. said after meeting with Chief Financial Officer Dana Russell.
Novell’s stock jumped due to these rumours, so people obviously realise — as do ourselves — that Novell might be split and then sell parts of itself. The less profitable parts of the company will likely then be shrunk in terms of workforce and sold below value or spun off. But who would be a suitable buyer? Citrix? Cisco? IBM? H-P? Dell? Maybe some local companies? And which pieces might be sold and when? At this stage, it is mere speculation. █
=> ↺ jumped due to these rumours | do ourselves | that Novell might be split and then sell parts of itself
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