Novell announced this morning that Messman has been dumped, and Hovsepian put in his place. Plus the CFO is changing.
Ooooh boy.
I didn't like Messman, so I'm not sad to see him go. However, the timing doth suck. The fact it is coming right now is a bad sign all around. This looks to be a move aimed directly at improving the share price in the short term. That can be done by 'cutting costs' or selling off bits of the company. The layoff axe bit pretty hard in November as it was, and I fear what another round would look like.
Unfortunately, the stock analysts don't read me or they'd know that Novell would have been in for a few bad quarters. The stock took a drubbing after the Q3 earnings report. An entirely predictable drubbing. As I've stated before the unambiguous statement Novell made about the future of NetWare is going to completely trash NetWare license renewals over the 12-24 months following BrainShare 2006. This started happening, and the stock tanked. This decline in revenue will happen again in Q4, and again in Q1-07. And to a lesser extent in Q2-07. I predicted this would happen as a result of Novell's statement, so I expected it to happen. And it did.
The Board of Directors moved about 6-9 months too soon. How they're going to 'restore share-holder value' is beyond me at this point. The fundamentals of the product say that they are just plain going to have a few bad quarters, and then revenues will pick up slowly afterwards as the Linux revenue continues to slowly increase. Changing CEO's will restore some confidence in the product, but the post-announcement pickup in stock price still hasn't recovered the value it lost after the Q3 announcement.
But making share-holders happy will have to involve maintaining revenues and cutting costs. Dropping or spinning off unprofitable products is probably going to happen. Yet more lay-offs will happen, very probably in the already diminished NetWare development groups. Novell has a lot of cash, so stock buy-backs to prop up value will almost definitely occur; a move that will diminish available resources for research and development (and mergers).
For the product that Novell sells, this move holds no good news.
Tags: novell
Ooooh boy.
I didn't like Messman, so I'm not sad to see him go. However, the timing doth suck. The fact it is coming right now is a bad sign all around. This looks to be a move aimed directly at improving the share price in the short term. That can be done by 'cutting costs' or selling off bits of the company. The layoff axe bit pretty hard in November as it was, and I fear what another round would look like.
Unfortunately, the stock analysts don't read me or they'd know that Novell would have been in for a few bad quarters. The stock took a drubbing after the Q3 earnings report. An entirely predictable drubbing. As I've stated before the unambiguous statement Novell made about the future of NetWare is going to completely trash NetWare license renewals over the 12-24 months following BrainShare 2006. This started happening, and the stock tanked. This decline in revenue will happen again in Q4, and again in Q1-07. And to a lesser extent in Q2-07. I predicted this would happen as a result of Novell's statement, so I expected it to happen. And it did.
The Board of Directors moved about 6-9 months too soon. How they're going to 'restore share-holder value' is beyond me at this point. The fundamentals of the product say that they are just plain going to have a few bad quarters, and then revenues will pick up slowly afterwards as the Linux revenue continues to slowly increase. Changing CEO's will restore some confidence in the product, but the post-announcement pickup in stock price still hasn't recovered the value it lost after the Q3 announcement.
But making share-holders happy will have to involve maintaining revenues and cutting costs. Dropping or spinning off unprofitable products is probably going to happen. Yet more lay-offs will happen, very probably in the already diminished NetWare development groups. Novell has a lot of cash, so stock buy-backs to prop up value will almost definitely occur; a move that will diminish available resources for research and development (and mergers).
For the product that Novell sells, this move holds no good news.
Tags: novell