06.20.09
Gemini version available ♊︎The Rumours May be True: Novell’s Financial Officer Talks About Selling Parts of Novell
Summary: Novell ponders slicing and dicing the business; Microsoft claimed to be failing too
We’ve just received some good answers to the question, “how big is Novell’s debt?”
For those who have not been following this, we floated the rumour that Novell is planning to sell parts of itself. Are these just “libelous rumours,” as the Novell-faithfuls would claim them to be? Well, no. Not anymore. Here is a new report from Reuters:
J.P. Morgan analyst John DiFucci wrote in a research note that Novell CFO Dana Russell “entertained the possibility of breaking out some parts of or selling the entire company, in order to maximize shareholder value given the current depressed valuation levels.”
Novell’s response? Well, “Novell says no plans to sell itself” screams the headline and the text fails to deny selling “some parts of” Novell.
Novell Inc (NOVL.O), the the No. 2 publicly held maker of Linux software, said on Friday it has no plans to sell itself after an analyst said the company’s finance chief considered the idea.
Always pay attention to the wording. Novell does not deny DiFucci’s statement. It only refutes the part about selling the entire company, so unless we are missing something, this statement is revealing. We will report some more about this later.
Looking at Novell’s new ally, Microsoft, Business Insider has a new piece where Henry Blodget claims that Steve Ballmer has gone bonkers. The headline may no longer say it so rudely, but the basic contention is that Microsoft — which is already borrowing money — essentially commits suicide on-line where it is trying to “tilt Google into the death spiral,” to use its infamous phrase.
Steve Ballmer says he is willing to invest 5%-10% of Microsoft’s operating income over the next five years on search.
That’s a boatload of money.
Specifically, assuming Microsoft’s operating income stays constant (it will likely grow), it’s $5.5-$11 billion.
According to this, Microsoft’s choice to live or die in search might in fact tilt a company “into the death spiral,” but that company is not Google.
To Gates and Ballmer, the demise of Microsoft would not be terrible news because they have personal wealth. In a similar vein, no matter how badly Novell performs, Ron Hovsepian squeezed huge bonuses out of the company while it’s going down. This is just like Wall Street bankers, who look after themselves and look at short-term goals alone. █
“Every time you use Google, you’re using a machine running the Linux kernel.”
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