03.07.10

IRC: #boycottnovell @ FreeNode: March 7th, 2010

Posted in IRC Logs at 7:53 pm by Dr. Roy Schestowitz

Read the log

Enter the IRC channel now

To use your own IRC client, join channel #boycottnovell in FreeNode.

Permalink Comments off      Send this to a friend

Links 7/3/2010: Deutsche Börse and Red Hat

Posted in News Roundup at 7:37 pm by Dr. Roy Schestowitz

Digital Tipping Point: Clip of the Day

Nakata Maho, founder of the OpenOffice.org Language project 02 (2004)

Digital Tipping Point is a Free software-like project where the raw videos are code. You can assist by participating.

Permalink Comments off      Send this to a friend

Security Disinformation

Posted in Free/Libre Software, FUD, Microsoft, Security at 8:57 am by Dr. Roy Schestowitz

Summary: Latest OpenSSL FUD and Microsoft’s Howard Schmidt’s role informing the public about cyber-security risks

OUR complaints about The Register have intensified recently [1, 2, 3, 4] because of poor articles like this one (see the comments).

The Register spreads FUD about OpenSSL (not the first such smear, after comparisons to "communism" too) and Bradley M. Kuhn from the SFLC has responded as follows:

Ok, Be Afraid if Someone’s Got a Voltmeter Hooked to Your CPU

Boy, do I hate it when a FLOSS project is given a hard time unfairly. I was this morning greeted with news from many places that OpenSSL, one of the most common FLOSS software libraries used for cryptography, was somehow “severely vulnerable”.

I had a hunch what was going on. I quickly downloaded a copy of the academic paper that was cited as the sole source for the story and read it. As I feared, OpenSSL was getting some bad press unfairly. One must really read this academic computer science article in the context it was written; most commenting about this paper probably did not.

First of all, I don’t claim to be an expert on cryptography, and I think my knowledge level to opine on this subject remains limited to a little blog post like this and nothing more. Between college and graduate school, I worked as a system administrator focusing on network security. While a computer science graduate student, I did take two cryptography courses, two theory of computation courses, and one class on complexity theory. So, when compared to the general population I probably am an expert, but compared to people who actually work in cryptography regularly, I’m clearly a novice. However, I suspect many who have hitherto opined about this academic article to declare this “severe vulnerability” have even less knowledge than I do on the subject.

There are much bigger problems to worry about, such as the latest news about Windows botnets [1, 2, 3]. The authors of the Windows exploit might not even face a jail sentence, based on this report.

Three Spanish men were arrested last month for allegedly building an international network of more than 12 million hacked PCs that were used for everything from identity theft to spamming. But according to Spanish authorities and security experts who helped unravel the crime ring, the accused may very well never see the inside of a jail cell even if they are ultimately found guilty, due to insufficient cyber crime legislation in Spain.

Regarding this new article about Scott Charney’s outrageous remarks [1, 2] (he worked for the US government before Microsoft hired him), Groklaw wrote 3 days ago: “First Microsoft fills the world with security issues and problems, then it wants the public to be taxed to fix them? I think Microsoft needs to fix its own software itself.” Microsoft’s own negligence [1, 2, 3] ought to have Microsoft bear the bill.

Howard Schmidt, the US Cyber Czar who came directly from Microsoft [1, 2, 3, 4], claims/pretends that there is no problem, even though many firms that include Google were intruded due to an Internet Explorer hole that Microsoft had knowingly ignored for 5 months [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12] (there are more security patches coming shortly). Even Google source code got grabbed. [via]

Operation Aurora continues to be a hot topic inside and outside of security circles. At this week’s RSA Conference in San Francisco many conversations are on the topic of the attacks that hit Google and dozens of other companies in January.

These reports indicate that proprietary source code got nicked from Google. Microsoft also nicks proprietary source code from companies/projects like Plurk [1, 2, 3, 4], which probably puts the Redmond-based company at the same side as the crackers.

“Cyberwar Hype Intended to Destroy the Open Internet,” says this report from Wired. [via]

The biggest threat to the open internet is not Chinese government hackers or greedy anti-net-neutrality ISPs, it’s Michael McConnell, the former director of national intelligence.

McConnell’s not dangerous because he knows anything about SQL injection hacks, but because he knows about social engineering. He’s the nice-seeming guy who’s willing and able to use fear-mongering to manipulate the federal bureaucracy for his own ends, while coming off like a straight shooter to those who are not in the know.

And on the other hand, on the same occasion we find that “US urges ‘action’ needed to fight net attacks,” according to the BBC.

Homeland Security secretary Janet Napolitano has admitted there is an urgent need to step up efforts to protect Americans from cyber attacks.

They seem to contradict themselves. Now they claim to be looking for ideas:

Homeland Security wants to pick your brains

[...]

The lucky winners will be invited to an event in Washington DC in late May or early June. They’ll get to partner with the department to lead in the planning of the National Cybersecurity Awareness Campaign, due to launch in October.

Over at CNET, Dennis O’Reilly has this new article about “five ways to keep your [Windows] PC free of viruses and Trojans”. Here is one of his suggestions.

If you can’t give up Windows, you may still be able to install Linux on an old PC or in a partition of your Windows PC. Then you can use that system (or partition) whenever you engage in any sensitive computer activities. You’ll find instructions for dual-booting Windows and the Ubuntu version of Linux on the Ubuntu Community Documentation site.

Thumbs up to Dennis. █

“Usually Microsoft doesn’t develop products, we buy products. It’s not a bad product, but bits and pieces are missing.”

–Arno Edelmann, Microsoft’s European business security product manager

Permalink A Single Comment      Send this to a friend

Broken Laws

Posted in Apple, GNU/Linux, Intellectual Monopoly, Microsoft, Patents at 8:03 am by Dr. Roy Schestowitz

Summary: ACTA, patents, and tax law challenged

TECHNICALLY, GNU and Linux make a fantastic platform that is Free (libre), stable, versatile, affordable, yet rather prestigious. The main rivals of GNU/Linux include Apple and Microsoft, both of which are already fighting GNU/Linux using software patents. Sadly for them, software patents are still invalid in the vast majority of the world, so they need to change the law. Here at Boycott Novell we strive to keep track of these issues which we consider to be most vital to the future freedoms of software. We also need to preserve developers’ right to develop programs without dreading a lawsuit over the use of some idea or algorithm. It’s not Free software which cripples the software industry; it’s ludicrous secret code and software patents that do this.

ACTA

Yesterday we showed that the ACTA conspiracy is trying to launder patent law around the world and the USPTO is likely to remain broken because the fox watches over this hen house. Here is an interesting USENET post from yesterday:

Subject: ACTA is one big con-artist scheme
From: Anonymous
Date: Saturday 06 Mar 2010 09:53:35
Groups: comp.os.linux.advocacy

I’m starting to understand why the U.S. is trying to con other nations  into ACTA:

First Step: Implement a patent system which allows the patenting of  obvious and trivial ‘inventions’, including software patents, business processes etc.

Second Step: Prod your citizens and corporations to patent virtually everything, even the most straightforward and trivial algorithms, patent things which were invented previously and allow the eternal extension of the patent’s duration by so-called Patent Extensions where trivial improvements are made to a patent, but will make it impossible for anyone to take use the invention in the expired patent because there’s hardly any difference between it and the Extended Patent.

Third Step: Force other nations through secret negotiations to accept you ‘Everything’s Patentable’ patent system (i.e. ACTA).

Fourth Step: Since U.S. companies and individuals have patented everything under the Sun, start litigation in countries which were stupid enough to adopt the U.S’s patent system and start raking in money without ever having to lift a finger. Start threatening with trade sanctions against countries that did not adapt the Trivial Patenting scheme, accusing them of ‘Intellecual Property Infringement.’

Let’s recall what Vice President Biden did a few months back (we have the video). The EFF is formally complaining about this abuse of power right now:

The Obama Administration has been slowly ramping up its attention to intellectual property issues. Over the past few months, we’ve seen an IP “summit” at the White House. We’ve seen the successful nomination of a new cabinet-level “IP Czar” position. We’ve seen the announcement of a new DOJ task force for IP issues. What does it all portend?

[...]

The first bad omen came last December, when Vice President Biden invited the RIAA, MPAA and other representatives of the mainstream entertainment industry to a closed-door “Piracy Summit” at the White House. Although Biden’s office sold the summit as “bringing together all the stakeholders” in the piracy debate, it failed to invite a single representative of the public interest or the technology industry.

One outcome previewed at the summit was the formation of a new Department Of Justice “Intellectual Property Task Force”, which was formally announced in February. Unfortunately, the Department of Justice already has a history of coming down disproportionately hard on victims of the copyright conflict. And while the task force’s announcement stressed that IP crime “threatens not only our public safety but also our economic wellbeing,” it didn’t even pay lip-service to the harms to privacy, free speech, and innovation in the industry’s long war on piracy.

Intellectual monopolies are for monopolies; they have almost nothing to do with advancement.

Patents

OSS Watch writes about “threats to copyleft” in a guest post which says:

Combining freedoms and copyleft in the Gnu GPL license (invented by Richard Stallman) was the cornerstone of free software. This is now questioned due to the proliferation of incompatible copyleft licenses.

After counting 1,800 free software licenses used in hundreds of thousands of projects, the Black Duck company patented (Patent US 7,552,093 B2) the technology for controlling the use of open source licensing in a multi-source development process (meaning combined works, elaborated from multiple free components under different licenses).

No need to say that patenting proprietary technology to solve copyleft licenses incompatibility may not be seen by everyone as a major achievement!

This kind of incompatibility is exactly what the monopolies want. They want more patents, which help discriminate against the ‘small’ people. Here are some new reports that are mistaking patents for “inventions” [1, 2]. It’s about some person called NakaMats, who might just be a bit like Edison — that is, someone who took other people's ideas and filed them in the patent office (claiming credit for small variants of existing ideas). That’s not invention, it’s organisation.

Patents help lawyers, as lawsuits clearly suggest. Bad players like Rambus (which ambushed the market [1, 2, 3, 4, 5, 6, 7, 8, 9]) get to mess around with competition, using patents. From Reuters we learn that:

Memory chip designer Rambus Inc (RMBS.O) said the U.S. Patent and Trademark Office had affirmed two of three patents at the center of a legal dispute over whether graphics chip maker Nvidia Corp (NVDA.O) infringed on Rambus technology.

Patent Reform

Can one hope for amendments after a co-called ‘reform’ we’ve been hearing about for years. According to TechDirt, the patent reform bill is “more of the same”.

It still tries to switch the US to a “first to file” system, rather than “first to invent” — which just encourages more patents being filed faster, rather than better patents being filed. It has the same (controversial) damages setup as last year, which would be useful in limiting damages from infringement, but which many special interests hate.

Here is some detailed information about the changes.

Supplemental Examinations: Permits a patent holder to provide additional, potentially material prior art regarding the patent to the PTO. If the PTO considers the information and determines it has no effect on patentability, that additional information cannot serve as the basis for an inequitable conduct claim later in court. The information must be presented to the PTO and any reexamination must be completed prior to litigation.

It was unreasonable to expect the USPTO to become reasonable. It is run by lawyers, to whom more patents mean more business and personal income. The fox controls the hen house again.

Tax Evasion

Speaking of income, tax laws are broken because Microsoft is able to evade taxation, leaving it for others to pay the national bills. One of Microsoft’s former employees keeps complaining about this [1, 2, 3, 4, 5, 6, 7, 8, 9] and in his latest updates on this issue [1, 2, 3] he also includes hilarity from Rep. Larry Seaquist:

Does the Department of Revenue think Microsoft is following the law? Well, we’ve recently received a more detailed response from the department about this issue and will post more shortly. All I’ll say for now is that HB3176 labels this kind of out of state tax dodge an “abusive tax practice”.

As for Rep. Seaquist, when I wrote him to be sure he understood the problems with the bill (and to ask him for a public statement for the blog), he replied, “Gents, please direct your continuing concerns to Rep. Hunter. Very best wishes, Larry”

But Rep. Hunter is a former Microsoft manager. Smell the corruption that Microsoft presence in the United States government has brought about. The fox dominates the hen house again. █

Permalink Comments off      Send this to a friend

Microsoft Catch-up, Apple Lock-up, and GNU/Linux Freedom

Posted in Apple, GNU/Linux, Google, Microsoft, Patents, Servers at 6:54 am by Dr. Roy Schestowitz

Click image for full-sized version

Summary: The upper hand of GNU/Linux (and to a degree Google/Android/Chome OS) compared to consumerised production+marketing from those other two contenders

LAST WEEK we argued that Microsoft's Vista 7 is still trying to catch up with GNU/Linux. One of the writers of Lockergnome is now saying something similar about Microsoft’s endeavours online, where Microsoft loses over $2,000,000,000 per year for obvious reasons. Here are some portions of the argument:

Microsoft Has Become The Follower & Will Lead No More

It sounds so wrong. Microsoft, one of the two remaining companies that helped bring the idea of personal computing into the mainstream is saying that the future it is betting on is in the “cloud”. How strange is that? That is somewhat like a black person from the 1870s stating that he was betting on the institution of slavery.

[...]

Now, in a story from PC Magazine, we have a message that Steve Ballmer has stated the company is betting its future on cloud computing. What a turnaround.

The trouble is, I don’t think Mr. Ballmer is doing anything but hedging bets, and being disingenuous in the process, because he knows (or should, anyway) that once cloud computing comes, Microsoft becomes irrelevant and unnecessary.

[...]

The problem in the end is that Microsoft is not, and never really wanted to be, like IBM. If any change in the pecking order comes as a result of “the cloud” catching on, it will be IBM, Oracle, and others that know what distributed computing, and client-server computing are all about on the grand scale. That doesn’t say Microsoft; that says the companies that make and use the big iron.

“Ballmer: Google wasn’t first to market,” alerts us one reader by E-mail. He cites an article written by a former Microsoft booster from the Seattle P-I (there are better articles out there). Our reader uses an analogy: ‘”I am sure they are sour,” said the Fox.’

Microsoft uses similar excuses when asked about the iPhone and the iPod. We gave an example two weeks ago.

Microsoft not only suffers online; the reality behind Vista 7 more recently included Intel problems. The company is unable to ‘upgrade’ and Pogson says:

When you manipulate the world into using your stuff and you use non-standards to do it, you have to eat your own dog-food. Intel is choking on it as they move to “7″.

This is a fine example of why we should use Free Software and stick to open standards. All the IE6isms built into the web and LANs lock us forever into obsolete technology. Those of us who migrated to GNU/Linux years ago are laughing. We can upgrade with scarcely a concern for widespread incompatibilities.

Meanwhile, Microsoft announces fake numbers referring to “sales” of Vista 7 and “research” spendings. We have debunked these myths and fake numbers on numerous occasion before in this Web site. These are lies and they should be treated this way.

“Meanwhile, Microsoft announces fake numbers referring to “sales” of Vista 7 and “research” spendings.”Vista 7 is in some sense irrelevant to the future because it is too heavy for mobile devices (there are signs of the weakening of the desktop, including games, some of which go Web based or mobile as they rely on different business models). Microsoft is truly late to the game, trying to fight embedded Linux with software patents it cannot even name.

In order to keep up with the device space, Microsoft is now making some noise about “Courier”, but there is no decent operating system for this device (which could end up like Zune). Roughly Drafted, a site that’s close to Apple (enough to get access to confidential meetings), has already explained why “Courier” has no real chance in the market.

Additionally, the only success surrounding the Xbox as a software platform came only after Microsoft dumped many billions into a loss leader hardware platform over the course of several years, after claiming a year or two head start over rival Sony’s next generation console.

Microsoft isn’t going to give away 75 million mobile devices to catch up to Apple. Microsoft’s fan base might do well to stop and listen to what the company says out the other side of its mouth, such as when it talks about “attach rates” of games for the Xbox. What’s the attach rate for the Zune HD? Does one need more than one hand to count the number of apps for it? And how many hundred hardware units has Microsoft sold at retail these days?

In this new multitouch mobile race, Microsoft is already three years and three product categories behind. And of course, WP7, the Zune, and Courier all sport completely different interfaces that were conceived and designed by far-flung teams who were not even aware of each other’s goals within the cat herds that are Microsoft.

For those who think that iPad stands a chance, evidence suggests otherwise [1, 2, 3, 4, 5, 6, 7, 8]. Its function is far too limited compared to that of GNU/Linux. Apple stifles and limits its users rather than empower them and the latest examples of this include the removal of Wi-Fi finders. [via]

Apple on Thursday began removing another category of apps from its iPhone App Store. This time, it’s not porn, it’s Wi-Fi.

Apple may find that telling its customers what to do rather than listening to them is a poor business strategy that emphasises control rather than enablement. The “think different” motto has become somewhat of a misfit. Apple is now trying to stifle Linux using software patents [1, 2, 3, 4, 5], which means that it’s afraid of Linux, not Windows. █

Permalink Comments off      Send this to a friend

Despite (or Because of) Microsoft’s Patent Extortion, Novell Continues to Focus on Mono

Posted in GNU/Linux, Microsoft, Mono, Novell, OpenSUSE, Red Hat at 6:31 am by Dr. Roy Schestowitz

Summary: More Mono news and changes in Novell’s staff

Several days ago we wrote about I-O Data joining Microsoft's Linux racket. There is a discussion about it in Slashdot and in relation to another issue, says this one person: “Microsoft has been using those patents to get the scared to ink patent deals. Nothing from a court to make a single patent claim from Microsoft valid, while somehow we are to believe that Microsoft is about playing nice with opensource ?; that it uses it patents against ?.”

“Novell had whitepapers bumped up a couple of days ago (reappearing in the news) in order to demote Red Hat, not Microsoft.”How can Novell and its sympathisers still pretend that Microsoft is safe to work with? Novell had whitepapers bumped up a couple of days ago (reappearing in the news) in order to demote Red Hat, not Microsoft [1, 2]. This has gone on for several weeks now.

Novell has also laid off many employees and often replaced them with people who are more familiar with Microsoft software (products like .NET). The following post is based on an article that we’ve mentioned here several times in recent weeks. Novell’s CEO admitted radically changing his workforce.

A quarter of Novell’s work force translates into a pretty large number of people scrambling to find work. (Even though there might not have been a net job loss, since Novel hired replacements.)

Those replacements are not always GNU/Linux oriented. Some are serving Microsoft with Mono and Moonlight in in Planet SUSE we just find updates about Moonlight accessibility (and accessibility for Mono too). Due to patent-related statements from Microsoft, it is safe to say that key Novell projects like Banshee (still in the news this week) are Novell-only software and OpenSUSE is viewed by some as a place for Mono. Here is an example from several days ago:

I am a C# programmer at work so I looked to see who was managing the Mono project, turns out Novell/OpenSuse are lying in bed with the Mono project. SO fast forward to today. Installed OpenSuse 11.2 on a server at work. This server is going to house Solr (running on Jetty) which will be used for product searches.

Is it Novell’s plan to capture and to spread C#? Is that its added value? "Peace of mind"? Microsoft is already playing hardball with software patents, so what is Novell thinking? It also helps Microsoft get its way with programmers (“API wars”). █

Permalink Comments off      Send this to a friend

Vulture Fund Still the Only Bidder for Novell

Posted in Finance, Microsoft, NetWare, Novell at 5:21 am by Dr. Roy Schestowitz

Summary: Updates from the news regarding what seems like Novell’s imminent sale

SINGER’S BID to buy Novell is a subject that we’ve covered in:

1. Novell May be Going Private, Hedge Fund Has Cash
2. Analyst Expects Microsoft Bid to Buy Novell
3. Ron Hovsepian Receives Another Large Lump of Cash as Novell Sale Looms
4. GNU/Linux-Savvy Writers View Elliot Associates as Bad Neighbourhood
5. Firm Behind Novell Bid Has Shady Past, Could be Tied to Microsoft (Paul E. Singer’s ‘Vulture Fund’)
6. Simon Phipps: “Seems Even With Microsoft’s Support Novell Couldn’t Cut It”

Nobody is through covering what will be a saga running for several months to come. Dana Blankenhorn writes about Microsoft’s stake in this:

In all the talk about New York financier Paul Singer’s plan to go all Gordon Gecko on Novell, one word has not been mentioned nearly enough.

Microsoft.

Microsoft needs a viable Novell, and Novell’s Linux business was on the verge of becoming viable when Singer’s Elliott Associates swooped in with an offer to break up the company, seize its cash, split off the old NetWare business, and auction off Suse Linux.

I doubt Microsoft wants to actually buy that business. Owning a Linux would be a real complication. Suddenly all those patent cross-licenses that claim Microsoft has patent rights to the software take on a different odor, and Microsoft is forced to go down the SCO road to prove its claims.

Microsoft has been doing well against Linux through bluff. What the Elliott move does is threaten to make Microsoft show its hand.

Even the due diligence process could threaten Microsoft. Singer is going to get a look inside that 2006 agreement.

Microsoft’s friend Rob Enderle [1, 2, 3, 4, 5], who shilled for SCO and cursed its opposition for profit, says that “Another SCO Moment [is] Coming” (because of Novell). Given his proximity to Ballmer, maybe this is how Microsoft views it too. Novell has UNIX and it has many software patents. The ‘Microsoft press’ covered it too and one Microsoft booster over there says that these are “Exciting times in Waltham.”

Redmond too? One might suggest that on the one hand, Microsoft would benefit from having less competition in networking (except the fact that Novell may sell this bunch of assets). On the other hand, argues Peter Judge:

Why Microsoft Can’t Afford To Let Novell Die

[...]

Make no mistake – The hedge fund offer for Novell could effectively mean the end of the company. And Microsoft could suffer the worst, says Peter Judge

[...]

But Microsoft has staked any open source credibility that it has, on Novell’s SUSE distribution. If Novell falls to bits, then Microsoft’s efforts to gain open source cred pretty much disappear with it. It’s something that would have been impossible to imagine a few years back, but if we’re looking for someone to prop Novell up, Microsoft would now be a prime candidate.

Of course, given the hostility within the open source community towards Microsoft, Novell and the deal between them, as well as to Codeplex and other open source moves by Microsoft, there would be big questions about how commercially viable Novell would be within Microsoft. But Redmond would be looking at this as an essential purchase for credibility, not a profit centre.

Whoever makes a “White Knight” bid for Novell is going to have to move fast, because talent there is going to leave if it looks like the company will be broken up. And even if the Elliot deal goes through, there is still the possibility of deals behind the scenes, points out Updegrove. For instance, Elliot might agree to instantly sell on parts of Novell to a differnet player – say an IBM, a Microsoft or an Oracle – as soon as it seals a purchase for the whole company.

The Elliot bid is on the table and there is no going back. Novell, as we know it is going to end – and at this stage, we simply don’t know what will replace it.

Novell has been Microsoft’s credibility for patent extortion too. This is why this Web site exists. Other issues include Mono and Moonlight.

Scott M. Fulton, a Windows-oriented writer, argues that the “$1 billion takeover bid may mean the end of Novell’s makeover addiction”.

Sam Dean wrote about this bid and later he added:

Elliott Associates is more likely to flip divisions of Novell to interested buyers than it is to oversee a long-term strategy for the company as it stands. Novell’s Linux business is most likely to be flipped first. At that point, companies ranging from Oracle, to VMware to IBM could be buyers, but smaller players could be too.

Finally he says that:

Elliott Associates will almost certainly carve Novell up, and it won’t be a surprise to see a big, household name in the software industry inherit Novell’s core assets.

Here are some thoughts about other companies that may bid for Novell.

Though Elliott insists that isn’t its strategy, another buyer could result in a nice payday for Elliott, which began buying up Novell stock only in early January.

A rival buyer would guarantee at least $75 million in profit for Elliott’s 8.5% stake — not bad for two month’s work.

So who are the most likely suspects? IBM tops the list. The company is probably the biggest proponent of open-source software out there, such as Novell’s Suse Linux, which holds about a third of the Linux server operating system market, the rest held by Red Hat Inc.

“IBM could use its own Linux distro and x64 hypervisor as well as the systems management and identity management tools that Novell has taken possession of over the years,” opined The Register, “and it knows how to ride down a legacy software business like NetWare.”

An IBM-Novell merger has been suggested before. “Red Hat’s dominance leaves IBM almost entirely dependent upon SuSe/Novell,” wrote Sun Microsystems Inc.’s then-COO Jonathan Schwartz in 2004. “Whoever owns Novell controls the OS on which IBM’s future depends.”

There are interesting comments in Linux Today and in LWN. Sam Varghese wrote about the role of the Microsoft deal.

Novell has had a hard time making profits ever since its NetWare product was knocked off the pedestal it occupied in the ’80s and early 1990s. In November 2006, the company signed a patent-licensing deal with Microsoft but has yet to show substantial gains from the deal.

Varghese later explained why these may be the last days of Novell as we know it.

As the former editor of Linux Today, the erudite Brian Profitt, points out, Elliott, like quite a good many other hedge funds, behaves like a vulture. It buys companies, dismembers them and sells them for a profit.

There will be no emotion where Elliott is concerned; the fund even purchased debt in a poor country like Costa Rica when it was possible to make a few million there, Profitt writes. In this respect, Elliott appears to follow in the grand tradition of asset management companies like the legendary Kohlberg, Kravis and Roberts.

Free software and open source types may agonise over a sale, since one of the better known GNU/Linux distributions, SUSE Linux, is one of the main assets that Novell still possesses.

But Elliott can probably only see dollar signs when it looks at Novell and if the commercial SUSE distribution suffers as a result, I doubt that there would be any tears shed.

“Unlikely to Go Through”

The bid in its current form is “unlikely to go through”, according to someone whom Forbes quotes.

Broadpoint AmTech analyst Bradley G. Whitt agreed that Elliot’s bid as it stands is unlikely to go through. He thinks the bid could trigger a sense of urgency among other large software companies that might have interest in some of Novell’s assets but cautioned that Novell’s broad product suite would make it hard to pinpoint any one software player that might be interested in an all-out acquisition. A more likely scenario would be Elliot, or whichever firm wins the acquisition, breaking up Novell and selling the pieces to various other players.

A bidding war is still expected by investors, but no company has stepped up yet.

There’s a storm brewing over Novell (Nasdaq: NOVL). The Linux specialist got an unsolicited buyout bid from a private equity firm — but investors seem to expect a bidding war.

“Long Overdue”

The takeover bid is “long overdue”, writes someone in the New York Times.

A Novell buyout is long overdue. The software maker’s shares have languished for 20 years, yet it generates healthy profit and has no debt. Moreover, a big chunk of the company’s $1 billion of cash is trapped overseas. Elliott Associates’ $2 billion bid could draw out other suitors that have dawdled.

Novell’s legacy enterprise networking business is a slowly shrinking cash cow. Clients are locked into paying highly profitable maintenance fees. The company should bring in about $300 million of revenue from this business this year, with roughly half of it flowing through as operating profit, according to analysts. Moreover, this business doesn’t require much capital expenditure.

[...]

Another attraction for some buyers is Novell’s overseas cash pile. The company can’t repatriate these funds without taking a tax hit. It could use the cash for international acquisitions. But with many of its rivals in the same position, attractive targets are hard to find.

To quote more from the New York Times (blogs):

Another attraction for some buyers is Novell’s overseas cash pile, according to Breakingviews. The company can’t repatriate these funds without taking a tax hit. It could use the cash for international acquisitions. But with many of its rivals in the same position, attractive targets are hard to find, it notes.

Here is an incorrect headline which suggests that more bidders have already emerged (another one repeats Reuters’ mistake of suggesting it’s final).

Under Investigation

The investigation we mentioned the other day has more than just the initial coverage right now [1, 2]. Here again is the press release [1, 2, 3].

Kendall Law Group announced that it has launched an investigation into Novell Inc. in connection with the proposed acquisition by Elliott Associates, L.P. The firm is concerned that the Board of Directors of the Company may breach their fiduciary duties by failing to seek other deals to better represent the value of the company if they agree to this proposal.

As we noted before, Singer has had it planned all along based on the dates.

Elliott began acquiring Novell stock on Jan. 4 and controls about 8.5 percent of the company.

The vulture fund probably waited for the results to come and made the bid just a few days afterwards. Here is new financial analysis of Novell [1, 2].

Institutional shareholders of Novell provided feedback on a range of issues, including capital structure, strategy, corporate governance and executive compensation. Participants responded to 20 specific questions, providing direct company assessments and detailed commentary.

A timely presentation too:

– “Are You in Control of Your Sales Expenses?” — executive workshop presentation by Jim Parker, director of global finance at Novell.

For completeness, here is some additional Novell news which is more about money than technical issues relating to the bid [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16]. “Novell Soars After Elliott Makes $2 Billion Offer,” says Bloomberg. They seem to have a deal with BusinessWeek (article sharing/aggregation) and HedgeFund.net says: “Novell, according to Elliott, has “meaningfully underperformed.” The company had manufactured its Netware operating system with considerable success until Microsoft, the software giant fueled by the ambition of its founder Bill Gates, began gobbling up marketshare with its Windows NT platform. Novell has also undergone a lot of management turnover. Current Google Chief Executive Officer Eric Schmidt used to head the company. But Novell is still considered valuable, in large part because of its Linux business.”

“The value, net of cash, is roughly $1 billion in enterprise value,” says another source (because Novell has cash too).

Other market news that mentions the effect on Novell’s stock can be found in [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25]. Here is the coverage from Zacks (also here) and a video that covers the news.

More from the news:

And finally:

It could take weeks or months before Novell’s vocation is known. The uncertainties are unhelpful to business. █

Permalink Comments off      Send this to a friend

Novell News Summary – Part II: SCO Case Resumes, Cloud Security Alliance (CSA) Hits the Headlines as Novell Makes Announcement

Posted in Mail, Novell, SCO, Security, Servers, Videos, Virtualisation at 4:27 am by Dr. Roy Schestowitz

Summary: Highlights of Novell news, including the important announcement of Cloud Security Alliance

THE news about the takeover [1, 2, 3, 4, 5, 6] is very major and we will cover it separately in the next post. Novell’s proprietary business did not receive much coverage because of this news about a takeover bid, but there are still some bits worth going through.

Read the rest of this entry »

Permalink Comments off      Send this to a friend