09.24.10
Novell Down 7% Today, Buyers Deemed Unsuitable, and Sale Value Estimated at $2.8 Billion
Summary: Some of the very latest developments in Novell’s sale saga and interpretation from various sources
NOVELL is at the stage where it must sell due to expectations from clients and investors (there is apparently an offer on the table). Steven J. Vaughan-Nichols says, based on reporting from Reuters, that “VMware’s Novell SUSE Linux buy out runs into a snag”. The thing about Novell is that the shares fell (Novell, Inc. (NOVL.O) was down $0.43/-6.61% yesterday with an additional -0.33% after hours) because a sale might not be so immediate.
Reuters wrote about this fall, Susan said that “Novell acquisition delayed over legacy assets”, and the main report says that Novell is looking at more options: “The auction of Novell’s (NOVL.O) NetWare and identity management products is dragging as rivals appear more willing to pay up for the software maker’s crown-jewel Linux operating system unit, sources familiar with the matter said on Wednesday.
“Novell’s board, which hired JPMorgan in March to look at strategic options for the whole company, is unwilling to part with its best performing unit SUSE Linux alone and be left with a shell of legacy assets, according to three sources, who requested anonymity because they were not authorized to speak on the record about the auction.”
“Novell is where companies and products came to die.”Novell is just too diverse for a simple sale to be made. Ron Hovsepian made things worse by further diversifying the company with the acquisition of other companies like Managed Objects (whose CEO quit Novell last year). It turns out she was not alone: “Prior to Playxpert, Manning was the vice president of product management at Managed Objects. Managed Objects was the industry leader in Business Service Management and was later acquired by Novell.”
Novell is where companies and products came to die. Hovsepian just had little clue what he was doing with the company and his technical chief/strategist quit the company earlier this year. Now the company is in a freefall, except of course if one considers the impact of the company’s sale on the stock. There are still many more articles about that sale (e.g. [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12]). “Novell Could Sell for $2.8B,” says this one report and the effect on the stock got covered in [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18].
One writer from IDG argues that “VMware Could Abandon Anti-OS Crusade with Novell Linux Purchase” (Groklaw might beg to argue that this "crusade" is fake).
But analysts say VMware’s apparent attempt to purchase SUSE Linux makes perfect sense, and will help VMware compete against Microsoft (MSFT), its primary rival, and also Red Hat, which claims VMware can’t offer a full cloud computing stack because it lacks an operating system.
If Microsoft Windows retains its current dominance, VMware may not be able to compete against Microsoft in the long run, says Burton Group analyst Chris Wolf.
Sam from ITWire wonders, “[i]f VMware buys Novell, what happens to the Microsoft deal?”
Novell sponsors this project with people, hardware and services. But OpenSUSE has its own board and along with community contributors has put together what it calls a list of strengths, weaknesses, opportunities and threats. It makes for extremely interesting reading.
How will VMware, which was once suspected of using code from Linux in its ESX Server and not releasing the source, handle the crowd of developers at OpenSUSE who are quite clearly not a docile lot?
There are other interesting questions that present themselves. What happens to Mono and Moonlight, both projects run by Miguel de Icaza, a vice-president at Novell, which aim to make it easier for Microsoft products to play with Linux, in particular SUSE?
Novell has long used these projects as a means of claiming better interoperability with Microsoft. Once VMware has its own operating system – as it would if it bought Novell’s Linux business, why would it care for projects like Mono and Moonlight?
Both projects, it must be added, have not increased Novell’s popularity among the free software and open source software communities. VMware can do without negative karma in these communities – it already has plenty.
It is long a article that does not actually answer the question presented in the headline. It is not entirely clear how such an acquisition would affect the Novell-Microsoft deal. As far is SUSE is concerned, the same rules would probably apply (e.g. the Microsoft-stuffed VM_Bware paying Microsoft for GNU/Linux sales).
OStatic incorrectly characterises Novell as an open source company and asks, “If VMware Buys SUSE Linux, Could Red Hat Feel the Heat?”
Could VMware indeed be a part of an acquisition plan for Novell, and if so, could that spell bad news for Red Hat?
Red Hat, of course, has been a market darling for some time now, continuing to post quarter after quarter of good financial results based on its basic business model of supporting Linux. It has always competed with Novell in the Linux business, but Novell’s Linux business has had spotty results in recent years, due in part to its partnership with Microsoft and dependence on Microsoft to help turn up Linux deals. Now, according to some, Novell may have only a few weeks left as an independent company.
Daniel Kusnetzky, a virtualisation guru, looks at ramifications of VM_Bware buying SUSE:
If the worst case scenario that is possible occurs, I’m expecting to hear cries for interoperability and cross platform migration that will be similar to the cries heard in the 1960s and 1970s. Are we doomed to repeat this cycle over and over again?
Novell is about to be sold; the question is to who and under what conditions. █
