EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

03.05.09

Final Analysis of Novell’s Q1 Results and Consequences

Posted in Finance, GNU/Linux, Microsoft, Novell, Ron Hovsepian at 7:42 am by Dr. Roy Schestowitz

Novell cafe

Summary: More evidence that Novell suffers from the Microsoft deal, but the company’s CEO takes bonuses

ACCORDING TO “The Var Guy”, who has been in good touch with Novell for over a year, Novell is heading down.

Check out the one-year stock charts for Novell (NOVL) and Red Hat (RHT). Neither chart is particularly impressive, but the trends are unmistakable. As the economy went from bad to worse in calendar year 2008, Wall Street lost more and more faith in Novell. In stark contrast, sometime in late November 2008 — amid heightened credit crunch concerns — financial pundits started betting heavier and heavier on Red Hat shares.

The comments in Linux Today show that many GNU/Linux users are actually encouraged by Novell’s demise. Here is one response to Novell’s excuses:

Maybe the business world really does not want to do business with Novell. Maybe business customers really do think about the implications of Novell’s deal with Microsoft.

In addition to what we’ve already referenced, here are some more financial analyses:

One issue that we have looked at before is the excessive bonuses that Ron Hovsepian is receiving [1, 2, 3]. The following essay is dedicated to this problem.

What Novell Could Learn From HP About How to Treat Employees

[...]

[C]ontrast this with the recent announcements of layoffs at Massachusetts-based software vendor Novell. Earlier this month, they laid off approximately 100 employees due to a “global economic downturn.” I have to wonder how many of those jobs could have been saved if Novell CEO Ron Hovsepian had declined to accept the sum total of his $6.9 million compensation package last year.

I mean, it’s not as if he didn’t see the potential for layoffs coming. In a December 4, 2008, conference call with analysts he is quoted as saying, “I think we are just evaluating at this point any additional restructures or activities that may take place in 2009, and those would be largely dependent on the overall economic condition and its impact to our revenues, if any.”

In other words, the writing was on the wall late last year but he still grabbed his share of the pie.

Ron Hovsepian will find it hard to dodge criticism, which now comes from IDG as well. Financial News USA covered it also.

Ronald Hovsepian, the president and chief executive of networking software maker Novell Inc., received a compensation package valued at nearly $6.9 million, according to a proxy statement filed Wednesday.
The total was down more than 5 percent from Hovsepian’s 2007 compensation of nearly $7.3 million.Hovsepian, who has served as CEO of Waltham, Mass.-based Novell since 2006, received a base salary of $912,214 and $2 million in cash incentive plan compensation, according to a filing with the Securities and Exchange Commission.His perquisites totaled $137,014 and included $9,200 in 401(k) contributions from the company, $112,244 in deferred compensation matching contributions and $6,263 for financial planning.

What is he being rewarded for?

In other financial news, Novell’s CFO will present at Morgan Stanley’s 2009 Technology Conference.

Novell, Inc. (NASDAQ: NOVL) today announced that Dana Russell, Senior Vice President and Chief Financial Officer of Novell, will present at the Morgan Stanley 2009 Technology Conference, March 2-4, 2009 at the Palace Hotel in San Francisco. Russell’s presentation will begin at 2:20pm PST on Tuesday, March 3.

There was also a delay.

Company representatives of Novell Inc will be presenting at the 2009 Morgan Stanley Technology Conference today. The Company’s presentation is scheduled to begin at 17:20 ET.

Novell was also mentioned very briefly in the financial press under:

In its conversations last week, Novell confirmed that layoffs are coming, but it used cryptic terminology to ‘dress up’ the statement. Novell cannot operate at a loss forever. It can only delay the inevitable.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

11 Comments

  1. JohnD said,

    March 5, 2009 at 9:08 am

    Gravatar

    Well any decent analyst will try to gauge public opinion of a company in addition to it financial results. So every BN support can give themselves a good pat on the back – it looks like your message is getting out to the media at least.
    But I hate to burst the bubble, the average user doesn’t care about FOSS ideology anymore then they care about MS dirty tactics. You can show the average person a preconfigured Linux machine that does everything their Windows machine can do and they’d probably buy it. Give them one with a default install and start talking about kernel version, package dependency, repositories, compiling source tar balls – their eyes will glaze over and they’ll ask for Windows.
    I’m not sure where the posters are getting their info when they say Novell is operating at a loss – the balance sheet says net income. Operating margin has doubled, liabilities decreased, equity increased. Overall number are down from the previous year, but the have net income for the first quarter as opposed to a loss in the 3rd quarter.
    Their numbers aren’t stellar, but the company is in a better position then GM. Given their cash on hand over 600mil – they could operate for at least 6 months with no income at all – I wish my company was in such a “bad” position.

  2. JohnD said,

    March 5, 2009 at 9:17 am

    Gravatar

    I’d also like to point out that CEO’s taking big bonus’ at the expense of the little guy is a world wide issue, not just a Novell issue. Look at the news and Morgan Stanley who took bailout money and made several hundred millionaires before they were bought by Citi. Refer to the bonehead who dropped 86 grand on a stinking rug. This is not to say that I agree with the bonus RH got, I think it was too high given current circumstances. That being said – a CEO who doubles a company’s operating margin should be entitled to some compensation. My personal opinion is that his compensation should be tied more closely with quarterly and yearly results.
    I think CEO bonus issues should be handled by Boycott Big Business.com.

  3. JohnD said,

    March 5, 2009 at 9:21 am

    Gravatar

    Wasn’t there a post about on here about Novell trying to inflate their stock price by repurchasing shares? My take was that it was just another “trick” by big bad Novell – well here’s a tid bit from a RedHat financial statement:
    Total cash,
    cash equivalents and investments as of November 30, 2008 were $1.1 billion
    after retiring $285 million of convertible debentures and repurchasing 2
    million shares of common stock.
    Hmm looks like Novell isn’t the only company trying to reduce it’s debt and increase share value.
    When a company increases share value does it help the little guy/gal on the street or the company execs?

  4. JohnD said,

    March 5, 2009 at 9:31 am

    Gravatar

    Wait here’s some tid bits from the Var Guy quoted in the post. This is what he had to say in Nov 08
    “Frankly, The VAR Guy doesn’t have the answers to those questions. He does know that Novell has been growing faster than the overall Linux market. And Lenovo recently introduced servers with Novell SUSE Linux rather than Red Hat Enterprise Linux.”
    and
    “Still, Novell’s close alignment with Microsoft — initially criticized by The VAR Guy — seems to be paying dividends as Novell finds itself in more and more corporate data centers. Now, Microsoft solutions providers could give Novell another boost in the IT channel.”
    http://www.thevarguy.com/2008/11/11/novell-attacks-red-hat-with-linux-migration-offer/
    And some tidbits from the post linked above:
    SUSE Linux sales continue to climb. And acquisitions like PlateSpin provide promising revenue opportunities for Novell.
    Oh, and Red Hat did land at the top of The Open Source 50, which tracks the most promising open source partner programs. (Although Novell landed in the No. 3 spot…)
    So we’re looking at the number 1 and 3 seeds in the Open Source 50 – paints a different picture now doesn’t it?

  5. aeshna23 said,

    March 5, 2009 at 1:43 pm

    Gravatar

    “When a company increases share value does it help the little guy/gal on the street or the company execs?”

    All owners of the stock–whether a company exec or the owner of a single share–experience the same percentage increase in value of their stock. Stock repurchases are often the best way a company can help its shareholders, since capital gains are treated favourably compared to dividends (in the United States).

  6. JohnD said,

    March 5, 2009 at 2:11 pm

    Gravatar

    Thanks aeshna23, but my question was a rhetorical one (I’m married to a CPA).
    I was trying to point out that the teflon boys at RedHat boosted their share price using stock buyback just like Novell. Yet Novell was panned for doing it whereas for RedHat is was seen as a positive.

  7. Dan O'Brian said,

    March 5, 2009 at 7:18 pm

    Gravatar

    JohnD: as you’ve already discovered, these BN guys have double standards.

    If Red Hat kills babies, Roy will find a way to spin it as Good For Linux. But if Novell tries to save babies, whether they succeed or not, Roy will spin it as an attempt to destroy FLOSS.

  8. Jose_X said,

    March 6, 2009 at 12:42 am

    Gravatar

    The financial pictures are always a little muddy. There tends to be overshoot and lag/lead as people fight for the best deals on stock. Also, we would be assuming accuracy of public information.

    JohnD covered a lot of points, but from what I have read indirectly (I haven’t looked at NOVL SEC reports), it seems Novell’s Linux growth depends a lot on Microsoft, and that after an initial boost, Microsoft is not coming through (at least not recently). This might be a negotiating tactic on Microsoft’s part or might be indicative of a larger rejection of Novell and/or of Microsoft’s coupon selling.

    [Dan O'Brian] >> as you’ve already discovered, these BN guys have double standards.

    There is some bias and mistakes are made. I see the same from those that defend Microsoft and/or Novell. [I'm speaking generally, of course.]

    Boycottnovell puts out info with reader comments to help all readers make up their own mind on a per topic basis. Some postings are better researched than others.

    [As an aside, Nokia seems to be doing a great job with Qt: http://www.linuxtoday.com/news_story.php3?ltsn=2009-03-05-001-35-OS-EM&tbovrmode=1 ]

  9. Jose_X said,

    March 6, 2009 at 12:56 am

    Gravatar

    Qt development has been improving quickly recently. I don’t use it, but some claim QtCreator is very good http://labs.trolltech.com/blogs/category/qtcreator/ . You can download it with the Qt libraries and use it for commercial development for no charge. You can get the source code to everything from the git repositories. Nokia also wants to work with Linux distro makers to make sure it’s as easy as pie (press a button) to install this totally free and powerful developer platform on each participating distro.

    Roy, in the future, perhaps any mention of risky and monopolist supporting mono should be followed with a word or ten on (or links to) Qt/QtCreator.

  10. Dan O'Brian said,

    March 6, 2009 at 8:26 am

    Gravatar

    Jose_X: Since you don’t seem to understand the difference, Qt/QtCreator are not alternatives to Mono.

    Qt is a widget toolkit (which is an alternative to Gtk+ or even Windows.Forms, but not an alternative to Mono).

    QtCreator is an alternative to Glade or Microsoft’s widget layout tool (whatever it’s called). Once again, not an alternative to Mono.

    You guys haven’t the foggiest clue what you’re talking about most of the time.

  11. JohnD said,

    March 6, 2009 at 3:23 pm

    Gravatar

    A little more context to the financial side of things:
    “More than 10% of the stocks in the S&P 500 trade for less than $5. And with the market continuing to fall, more big-name firms could hit ‘penny stock’ status.”
    per:
    http://money.cnn.com/2009/03/06/markets/thebuzz/index.htm

What Else is New


  1. EPO Cannot Handle Patent Justice With a Backlog of About 10,000 Cases at the Boards of Appeal

    The EPO's long war on judges and on the law has proven to be costly; it's difficult to pretend that the EPO functions like a first-world legal framework



  2. The European Patent Office Increases Surveillance: Can't Get Food Without Being Spied on

    The infamous "War on Cash" has been 'won' at Europe's second-largest institution, where people's diet can now be monitored and indefinitely retained on the system



  3. To GNU/Linux, the Operating System, GAFAM (Google, Apple, Facebook, Amazon, Microsoft) is Not the Threat. Microsoft is.

    Don't let Microsoft get away with its bogus narration; GNU/Linux is primarily under attack from Microsoft, whereas Software Freedom in general is under attack from many directions



  4. The Free Software Foundation (FSF) Has the Full Support of Techrights

    Our support for the FSF is strong enough that we want to occasionally suggest improvements; there are growing frictions designed to isolate the FSF and cause self-restraint/censorship



  5. Why We Support Phoronix (Whereas Some Others Do Not)

    Some people try to characterise Michael Larabel as the 'bad boy' of Linux even though Michael is probably the hardest working Linux journalist out there



  6. Guarding and Rescuing the FSF Titanic: The Simplest Ways that AI will Change Computing

    "AI is already used to help kill people. We should be cautious, and know that the best rules we come up with (like no doing magic outside the school grounds) won't be followed all the time."



  7. Links 20/8/2019: DragonFlyBSD Developing DSynth

    Links for the day



  8. Guarding and Rescuing the FSF Titanic: Narcissism in The Community

    "Narcissists are drawn to intelligent people. They take great pleasure in attacking, controlling and defeating intelligent people because it makes them feel smarter and more important."



  9. Breaking the Law Has Become the Norm at the European Patent Office

    The European Patent Office’s ongoing practice of destroying critics/whistleblowers and crushing unions, judges, examiners etc. — as well as threats and bribery of the media — ultimately mean a perpetual state of lawlessness that, if it prevails, will let patent trolls raid the European economy and stall innovation



  10. Links 20/8/2019: KMyMoney 5.0.6, Kdenlive 19.08

    Links for the day



  11. Guarding and Rescuing the FSF Titanic: Free Software in Education

    "If everyone learns to code, then everyone gains some understanding of how to code in other languages."



  12. Links 19/8/2019: Another Linux 5.3 RC, OpenSUSE's Richard Brown Steps Down, Slackware Creates Patreon Page, Qt 6 Initiated

    Links for the day



  13. Speaking Truth to Monopolies (or How to Write Guest Posts in Techrights)

    We need to have more articles tackling the passage of all power — especially when it comes to software — to few large monopolies that disregard human rights or actively participate in their abolishment in the digital realm



  14. Guarding and Rescuing the FSF Titanic: Free as in Speech

    "While a new breed of so-called anarchists campaign against expression that even the state allows, people are also foolishly overplaying the relevance of the state to free speech issues -- as if it's not a freedom issue when a project is increasingly thought-policed, because the thought-policing isn't on a state level."



  15. Toxic Culture at Microsoft

    Racism, intolerance, sexism and bullying are rampant at Microsoft; but Microsoft would rather deflect/divert/sidetrack to Google and so-called 'GAFA'



  16. Guarding and Rescuing the FSF Titanic: Introduction

    "The FSF isn't just threatened, it will hit a large iceberg in the future that changes it permanently."



  17. Linux Journal and Linux.com Should Have Been Kept Going

    There's apparently no good explanation for the effective shutdown of Linux Journal and Linux.com; London Trust Media Holdings (LTMH), owner of Linux Journal, saw numbers improving and the Linux Foundation, steward of Linux.com, is loaded with money



  18. 2019 Microsoft Glossary

    How Microsoft internally interprets words that it is saying to the public and to the press



  19. 2019 Surveillance Glossary

    Distortion of technical and nontechnical terms in this day and age of '1984'



  20. Openwashing Report: It's Getting Worse, Fast. Everything is Apparently 'Open' Now Even Though It's Actually Proprietary.

    The latest examples (this past week's) of openwashing in the media, ranging from 5G to surveillance



  21. GitHub is a Dagger Inside Free/Open Source Software (FOSS); This is Why Microsoft Bought It

    A year later it seems pretty evident that Microsoft doesn’t like FOSS but is merely trying to control it, e.g. by buying millions of FOSS projects/repositories at the platform level (the above is what the Linux Foundation‘s Jim Zemlin said to Microsoft at their event while antitrust regulators were still assessing the proposed takeover)



  22. Microsoft Grows Within and Eats You From the Inside

    Microsoft entryism and other subversive tactics continue to threaten and sometimes successfully undermine the competition; Microsoft is nowadays doing that to core projects in the Free/Open Source software world



  23. Links 18/8/2019: New KNOPPIX and Emmabuntus Released

    Links for the day



  24. Links 17/8/2019: Unigine 2.9 and Git 2.23

    Links for the day



  25. Computer-Generated Patent Applications Show That Patents and Innovations Are Very Different Things

    The 'cheapening' of the concept of 'inventor' (or 'invention') undermines the whole foundation/basis of the patent system and deep inside patent law firms know it



  26. Concerns About IBM's Commitment to OpenSource.com After the Fall of Linux.com and Linux Journal

    The Web site OpenSource.com is over two decades old; in its current form it's about a decade old and it contains plenty of good articles, but will IBM think so too and, if so, will investment in the site carry on?



  27. Electronic Frontier Foundation Makes a Mistake by Giving Award to Microsoft Surveillance Person

    At age 30 (almost) the Electronic Frontier Foundation still campaigns for privacy; so why does it grant awards to enemies of privacy?



  28. Caturdays and Sundays at Techrights Will Get Busier

    Our plan to spend the weekends writing more articles about Software Freedom; it seems like a high-priority issue



  29. Why Techrights Doesn't Do Social Control Media

    Being managed and censored by platform owners (sometimes their shareholders) isn’t an alluring proposition when a site challenges conformist norms and the status quo; Techrights belongs in a platform of its own



  30. Patent Prosecution Highways and Examination Highways Are Dooming the EPO

    Speed is not a measure of quality; but today's EPO is just trying to get as much money as possible, as fast as possible (before the whole thing implodes)


RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

Recent Posts