05.15.08

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Novell’s Buybacks Not Enough, Says Analyst

Posted in Finance, Novell at 5:37 am by Dr. Roy Schestowitz

Further privatisation required

Yesterday we wrote about Novell's new buyback program. There are some more reactions to it now. Sarcastically, for example, says the following guy: “Novell finds someone willing to buy $100M worth of its stock.”

In January, Jefferies analyst Katherine Egbert predicted the buyback when she raised her rating on Novell stock from hold to buy and jacked her price target 50 cents to $7.50

He also refers to this post, which comes from one of the most pro-Microsoft publications out there (probably second only to Motley Fool/MSN).

Katherine Egbert, an analyst at Jefferies & Co., notes that the buyback is “unlikely to move the EPS needle, even if executed quickly and entirely.” She points out that the company has about $1.8 billion in cash on its balance sheet, or about 78% of Novell’s current market valuation of about $2.3 billion. (Net cash is around $1 billion.)

Then again, Katherine Egbert’s guesswork typically has it wrong. █

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2 Comments

b0rsuk said,

May 15, 2008 at 7:11 am

I’d like to point out the stats you use to back up your claims are misleading. Earlier (I believe comments were disabled) you pointed out to trends.google.com to illustrate that Novell/Suse is going down, or whatever. Well, guess what ? The same downward tendency is true for
http://www.google.com/trends?q=debian%2C+winxp%2C+fedora&ctab=0&geo=all&date=all&sort=0
debian, winxp, fedora . Not Ubuntu though.

“Operating system” and “linux” also go down in trends.google.com stats. So it’s probably something more general. I believe this happens because computers in general go mainstream, and are increasingly used by non-technical users. Such users often don’t care what OS they use. They just use whatever happens to be on the machine at the moment of purchase.

b0rsuk
David Flax said,

May 15, 2008 at 5:50 pm

The shame is you are really don’t understand stock buybacks. They are not always bad. Novell is cash heavy and buying back stock is good for investors who see the EPS go up and their stock value goes up. It helps to bone up on understanding why companies buy back stock. Using google trends isn’t a way to garner anything more than simple trends is misleading at best,, at worst it’s fraudulent.