06.24.09

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Further Signs That Novell Will Sell in Parts, Stock Rebounds

Posted in Finance, Novell, Rumour at 9:08 am by Dr. Roy Schestowitz

Novell sale

Summary: Novell employees give more signs that sale of Novell assets is still on the table

ABOUT A DAY AGO, one former employee of Novell said that they should sell parts of the company. Based on prior reports [1, 2, 3], this appears to be Novell’s plan and one anonymous comment suggests that Novell has already engaged in this “behind the scenes”.

Based on a new update from the comments in CNET:

As I mentioned over on BNET (http://industry.bnet.com/technology/10002269/novell-considering-being-acquired/), Novell has phrased their denials carefully. They said to me that they had “no current plans to sell the company.” When I pointed out that this statement wouldn’t cover a consideration to sell, early stage negotiations, or sales of parts of the company, the spokesman said, “I stand by the statement.” I read that as interested and open if not closing a deal today, which is far different from saying that it’s not for sale.

That is precisely what we said when Novell first made this statement. Here are more explicit details:

I talked briefly with a Novell spokesman and am waiting for more information or a comment. But entering pure speculation for a moment, given the relative importance of the Microsoft deal, could a Microsoft purchase of Novell be possible?

[UPDATE: Novell has filed an 8K with the SEC stating that the company has "no current plans to sell the company." Of course, that doesn't mean that management is not considering a sale and it also leaves open the room for selling anything shy of the entire company. It also is not a statement that management has no interest in selling all or part of the company in the interest of shareholders. I asked a company spokesman about this, who said that they stand by the statement. So, we're pretty much left with the word from DiFucci.]

As a recap, here are some old reports that came after the rumour. From the Boston press:

Novell approach

Novell Inc., the Waltham-based Linux software maker, may be willing to sell itself to boost shareholder value, JPMorgan Chase & Co. said after meeting with Chief Financial Officer Dana Russell.

Bloomberg has identical text in two aggregate reports:

Novell Inc. (NOVL US): The second-largest U.S. seller of Linux software said it has no current plans to sell the company. The shares rose 10 percent on June 19 after JPMorgan Chase & Co. said the company may be willing to sell itself.

Fox Business more or less repeats the report from Reuters and so does this site. It turns out that Reuters may have only parroted the SEC filing from Novell. The company was made so nervous by the rumours that it carefully phrased a short statement and pushed it out via the SEC as soon as possible.

Software and services company Novell Inc. (NOVL: News ) Friday said in a filing with the Securities and Exchange Commission that it currently has no plans to sell the company. Novel also said that it is continuing to operate in the best interest of its shareholders.

Bloomberg later came out with identical bits of text in reports about Novell’s slide:

Novell Inc. (NOVL US) lost 4.7 percent to $4.46 for the largest decline since May 29. The second-largest U.S. seller of Linux software said it has no current plans to sell the company. The shares rose 10 percent on June 19 after JPMorgan Chase & Co. said the company may be willing to sell itself.

More on the news can be found in:

i. Oil Drops 4%; Valero, Conoco, Exxon Fall

Novell, Inc (NOVL) lost 4.9% or 23 cents to $4.45 after the Linux software developer denied its plan to sell part of the company or businesses. On Friday, JP Morgan analyst had said that the company is exploring to sell part of the businesses in a research note.

ii. Novell Falls After Denying Reports of a Sale of the Company

After rising more than 10% on Friday on news of a potential sale of the company, shares of Novell (NASDAQ:NOVL) have given back just over 5% after the seller of Linux software said, in a filing with the SEC, that it has no current plans to sell the company.

The pro-Microsoft Motley Fool had something to say about Novell too:

Pay attention to the SEC’s entire definition, not just the stock price. Going solely on price would wrongly categorize billion-dollar companies Sprint Nextel (NYSE: S) and Novell (Nasdaq: NOVL) as penny stocks.

In summary, it’s reasonable to expect Novell to announce sale of parts of the company. Its investors are mostly okay with that.

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A Single Comment

  1. David "Lefty" Schlesinger said,

    June 24, 2009 at 7:45 pm

    Gravatar

    Okay, Roy, this is getting inane.

    Just to inject a much-needed note of reality here, if the management of Novell has filed an 8-K with the SEC saying that they don’t intend to sell the company, they don’t mean that they intend to sell part of the company, unless they want to find themselves doing a “perp walk”.

    Misleading investors is a felony no-no under US Securities law, and I’m pretty confident that the SEC would view an explanation that “we didn’t say we wouldn’t split up and sell a chunk of the company, exactly” as having much merit. “Thinking about” selling all or part the company is a plan, Roy, and I wouldn’t assume that the authorities here have nearly the liking for word games that you seem to imagine they do. (It may have escaped your notice that, to give just one example, the SEC is considering whether Apple misled investors by being cagey about Steve Jobs’ health, and that’s a lot iffier than what you’re suggesting Novell is doing.)

    These things are not hard to determine if you do a minimal amount–and I’m talking about ten seconds worth–of research. It’s not surprising, it’s just more evidence that you couldn’t care less about facts.

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