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Thursday, March 04, 2010

Will Larry Ellison buy Novell?

For the first time in years, shares of Novell were in high demand yesterday as investors sensed a possible feeding frenzy over the beleaguered company after private equity firm Elliot Associates made an unsolicited bid for Novell of $5.75 per share. NOVL stock promptly jumped $1.33 to $6.08, on astronomical volume (137 million shares were traded, more than 28 times the trailing three-month average volume).

I worked for Novell from 2002 to 2007 and watched it falter under some of the worst executive leadership in memory. This is a company, let us not recall, that even Dr. Eric Schmidt (currently head of Google, but onetime president of Novell) couldn't turn around.

This is a company that owned DrDOS and couldn't monetize it.

This is a company that owned WordPerfect and couldn't monetize it.

This is a company that owned (and still does) NetWare, a fabulously profitable operating system, but that turned off the NetWare profit spigot immediately after buying SuSE Linux (which it has still failed to monetize except for a short-lived comarketing agreement with Microsoft). SuSE Linux was the number-two Linux distribution in the world when Novell bought it. It's now what? Number four or five?

This is a company that spent $200 million to acquire SilverStream, then promptly ran the business into the ground.

This is a company that spent an equally astronomical amount of money to buy Cambridge Business Partners, and then all but disbanded it.

The litany of business failures under Jack Messman and Ron Hovsepian is a veritable catalog of business horrors.

Novell's great success in recent years has been in obtaining $500 million legal settlements from Microsoft.

But those days, too, are over.

Novell, however, does still have one plum asset under its control that few people seem to remember. It still owns AT&T UNIX.

And that's precisely why Oracle's Larry Ellison will make a last-minute bid for Novell. If he doesn't, he'll miss a great chance to own UNIX and one of the great Linux distros of the world (SuSE), along with a Gartner Magic Quadrant Identity Manager product, and the sadly aging cash cows GroupWise and NetWare -- a combo that's surely worth a quick cash bid of, say, $6 a share.

If Oracle wants to be in the Operating System biz, now's the time.

Your move, Larry.


  1. Larry would chop it up a bit, don't you think? Keep the Unix bit, maybe even SUSE. Identity stuff might be OK for Oracle also.

    Hard to say about virtualization. Keep or sell to CA or someone?

    Sell workgroup to a small buyer like GWAVA.

    Find a buyer for management.

  2. Anonymous12:22 PM

    Stock value of Novell - 2.10 Billion
    Cash equiv. on the books +900 Million
    Value if 30 years of patents +Billions
    Value owning Unix + a Billions or two
    Value of owning SUSE Linux Distro +.5 Billion
    Value of selling off each of the profitable products +2 Billion
    = + A lot of money

    Quite frankly, I'm surprised that it didn't happen earlier.

  3. Anonymous12:51 PM

    Actually Novell end of life'd NetWare this month... so they don't even have that anymore.

  4. Anonymous1:08 PM

    Just curious, if it was such a bad company why did you work there for so long (5 years)? Not saying it wasn't bad, btw, just curious.

  5. Anonymous1:44 PM

    "Sell workgroup to a small buyer like GWAVA. "

    I would love that, we already use many of their products such as Retain and Reload. Having GWAVA handle Groupwise would just make it better.

    Check them out at

  6. Anonymous2:52 PM

    Netwise and Groupware are both aging technologies. All revenue comes from existing customers and they are fewer and fewer for each and every year. That's not good business.

  7. Anonymous3:31 PM

    Netwise and Groupware, that's funny. Actually GroupWise continues to make occasional big sales. Both it and Teaming would be great to spin off.

    And OES, why don't they just start giving it away to lingering NW customers, and then drop it as a migration alternative after this year.

  8. Anonymous3:18 AM

    Why wouldn't Oracle just wait until the bits they really want come up for sale from Elliot? That way they don't spend $2bn+ to buy a company and give itself the hassle of disposing of all the stuff it has no use for?

  9. >>Just curious, if it was such a bad company why did you work there for so long (5 years)? Not saying it wasn't bad, btw, just curious.<<

    I worked there for 5 years because it was a great place to work. Novell is a great company in every way except one: They don't know how to make money. There is a huge disconnect between executive leadership and the rest of the company. As far as working there goes, it's actually a great place to work. They treat their people well.

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