Credit Suisse Writes Off Novell
November 29, 2006 Leave a comment
A quick follow up on Novell. While I expected them to take a bit of punishment from the Open Source community for the recent patent deal some previous coverage, I didn't expect them to take any punishment from Wall Street. If anything, I expected them to get rewarded by the street. It looks like at least one analyst has actually downgraded them as a direct result of the deal though. From a sys-con article (which is an absolutely horrific site that very consistently crashes my browser):
Credit Suisse analyst Jason Maynard took down Novell on Monday grading it an “Underperform.” He reckons the flurry in its stock after its alliance with Microsoft was based on a “one-time event” – Microsoft paying Novell $308 million net – and that the 10% appreciation in the stock isn't sustainable.”
“Rather than provide a growth engine for the company,” he wrote in a note. “We think Novell's Linux patent deal with Microsoft will hurt the company's standing in the open source community. We don't see Microsoft providing a sustainable lift to Novell's distribution woes. With Oracle entering the market, we doubt there will be enough room to support needed Linux market share gains. Finally, Novell's legacy NetWare business continues to decline, and the level at which revenue can be sustained is unknown.”
Maynard figures Novell will spend Microsoft's money on acquisitions, both to diversify and to support its systems management and identity interests. He also figures Novell will restructure again but without any material upside.
Now it's clear that Novell is having some business issues. It's the reason they have a new CEO. To see “will hurt the company's standing in the open source community” in an analyst downgrade though is a first for me I think. I wonder what the C-level execs at Novell are thinking right about now?
Novell, NOVL, Microsoft, MSFT, Open Source, Linux