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Novell Under Pressure From Investors
UltimaGuy writes "The pressure is growing on Novell Inc's management to make major strategic changes after a regulatory filing revealed a Novell shareholder has joined Credit Suisse First Boston in calling for change at the identity management and Linux vendor. The steps proposed by the investment firm include cutting costs by targeting Novell's two corporate jets, its 'overstaffed' R&D department, legacy products, and its 400 NetWare engineers, as well as selling non-core businesses to enable funds to be redeployed."
I guess it just doesn't pay to do your own research these days.
"Waste not one watt!" - CZ
Granted, if the firm discovered that 80% of the R&D staff isn't actually doing anything outside of playing QuakeIII or something, then yeah, they should be cut, a little...
If you ignore the other uses of a tool, does that make the tool less useful, or you less useful?
that investment firms and R&D don't go together well......
I know that not everyone in R&D is a brilliant scientist, but in the long run, its the R&D that helps the industry move forward
On a side note however, anything worthwhile coming out of Novell's R&D these days ?
I don't know about Novell, so perhaps they do have too many people, but I must say I'm rather alarmed the article mentions R&D being overstaffed and no other department. Most companies don't go all out hiring R&D folks to begin with - that's one of the things that makes Google so unusual - so they don't tend to be overstocked in R&D in the first place. I wonder if this fits in with the recent trend in corporate America to view R&D as a luxury and money sinkhole. Since the benefits don't show up next quarter, chop them off to look better in short term costs. Never mind five or ten years down the road when you need new products to stay competitive and don't have any.
Does ANYBODY in the US think long term anymore and still have influence in corporate or government circles? Maybe they're all thinking that if everybody else is also dumping R&D, everyone will still be competitive, and it will only be the consumer that gets stuck with static technology and gradually decreasing quality. (Price wars with no quality differential do that, since consumers tend to be bad in the short term at distinguishing good products from bad.)
"I object to doing things that computers can do." -- Olin Shivers, lispers.org
How does that relate to the issue of shareholders pressuring Novell to shape up? I didn't see anything in the article talking about a buyout happening anytime soon. Can you explain where you make that connection?
I mean, sure, it's possible in the future that they might get bought, but Novell is talking about a 2+ year plan to reshape themselves... Not exactly sounding like "sale", there.
What kind of time frame are you talking about, anyway?
I can't imagine two more disparate mindsets. There is no way Wall Street's greed and F/OSS's idealism can be simultaneously realized. If the managers at Novell had any spine, they'd tell Wall Street to take a hike, and instead worry about running the business. You can have a healthy profitable business without being obsessed with the cancer of promising ever-increasing returns to investers. If Novell wants to survive, they should go private, focus on making their customers happy, accept reasonable pay for their work, and not feel inadequate for lack of achieving world domination. Or they could do what every other Wall Street whore does, promise the impossible, sacrifice quality an people's lives in the process, build a lot of sand castles, and ultimately add nothing of permanant value to the world.
Since they're proposing to cut 400 guys, that must mean that the actual Netware development team is some number larger than 400. Why so many guys are still working on a dead-end product with no future is beyond me.
Cut back the corporate trappings, strip down to a core offering and get ready for a sale. Stripping down R&D to just what the market wants will help with that as well.
IBM to buy Novell?
Sun to buy Novell?
Private Equity to buy Novell?
Or alternative, Novell to flounder as they loose sight of any strategic direction while they look for a market exit.
An Eye for an Eye will make the whole world blind - Gandhi
Yes, I'm sure that is what an investment firm with a 5% stake is after. Those jets are certainly one of the more profitable divisions.
Never underestimate the dark side of the Source
Or at least, article summaries that completely miss the point about true R&D costs get a lot of screen time. When large companies engage in expensive R&D, they cover those costs by (gasp!) charging people for their products. True for new AMD chips, true for super-duper antibiotics, and true (however indirectly, and not obvious to a lot of people) for Google, too.
Does ANYBODY in the US think long term anymore and still have influence in corporate or government circles?
I think the better question is, do many companies still have the balls to explain to their customers why fancy new products cost what they cost? And, does the nitwitted consuming end of the culture, so saturated with the pernicious concept that every company charging them for a product or service is "evil," still have the intellectual honesty to look at the larger picture? Calling it like it is has become so unfashionable that we're just sinking in a swamp of mediocrity (or trying to, it seems) rather than teaching basic economics in grade school, where what's left of critical thinking might still be salvaged. By the time people become consumers and investors, they're so disconnected from causal relationships that they can't connect the dots between investment, innovation, time, risk, and cool new technologies.
Don't disappoint your bird dog. Go to the range.
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Comment removed based on user account deletion
Is Novell making money? Ignore the stock price, that has little to nothing to do with if Novell operates at a profit or loss. If they are making money, tell the MBA's to go take a flying fuck at a rolling doughnut. See also: Costco.
Ah, glad to see /. is keeping up with traditions as this one has been well covered on osnews.com for a day now.
I guess a few ghastly, greedy "investors" fronted by teenage analysts are now circling Novell, scenting blood and booty. My understanding is that Novell is nowhere near profitability and the gap between declining Netware revenue and new Linux revenue is alarming. But Novell does have quite a lot of cash in hand and is entangled with IBM via the SuSE acquisition. I'd guess some of the Wall Street greed merchants are hoping for a takeover or a dismemberment, with IBM being greenmailed into picking up a very large tab on the Linux side because losing SuSE would be too painful for them.
Of course, the little shits don't pitch it like that, just calling for better management.
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So you see if it makes a problem for someone to fix rather than ask first?
Please actually read all of the words in a comment before jumping to that conclusion. We asked. Everybody. No one knows what role the machine is playing. No one working there has any Novell experience, and can't imagine actually choosing that platform for anything.
And since the machine was crashy, we sure don't want to leave it cooking when it might be corrupting (or losing) data. Man you are the typical network admin
No, I'm there to clean up after the "typical network admin" who let that machine into the rack, undocumented, with no information about what it does, for whom, if anything. Better to let some dead-end machine, with an unknown security arrangement - possibly including credentials from long-gone employees, hum along on the network, crashing sometimes as it sees fit, just keep doing its mysterious thing? The end users had no idea that the machine was there or might need attention, and they hadn't budgeted for any forensics work along those lines. The consensus among the users of the network was to power the machine down until more became obvious or could be discovered in a round of calls/e-mails to now-absent users.
Nice smear, though! Did I really need to go into all of that just to make a point about creaky old Novell stuff lingering on a network? Have a swell day.
Don't disappoint your bird dog. Go to the range.
Everyone knows that there are still places out there with Novell 3.12 servers still in place and cranking away day after day. I do agree that 400(+/- a few) Netware Engineers is ridiculous. Keep about a dozen of the best you have to support your legacy systems from now till Hell Freezes over if that's what it takes but don't alienate and leave those that supported the companies beginnings high and dry of tech-support. They should at least offer the rest of those engineers re-training in Linux as apposed to just cutting the guilotine rope and letting it fall on them. Of course the shareholders are only interested in the green bottom line and re-training high dollar employees is much more expensive than hiring in entry level green meat. I think that companies should have a legal responsibility to those employees that stay with them for years through thick and thin. I've seen too many people pour their entire lives into a job/company for 30 years just to be cut loose at a moments notice without as much as an explanation and/or "thanks for your years of loyalty to us". I personally think that it should be a law that for every five years you work for a place they owe you 1 year of salary based on your yearly average over that 5 years. That way if they decide to dump you for no reason you have a year to recover mentally/emotionally/financially from the impact of what can be a very trying time in a persons life. I know we have unemployment but that's not the same, I'm not talking about a percentage paid to you by the company I mean that if I got fired today I would have the next 12 months pay come in just like normal and I could take my time planning my next career move. Oh well , nothing but a pipe dream I'm sure, dreaming isn't so bad a thing though :)
Jay Dale "If you're not living on the edge then you're taking up too much space!"
The investors obviously looked at the "success" of HP's gutting their R&D Dept. and decided that Novell should emulate HP.
Methinks it's time for more companies to consider going back to being privately held (as Corel did), so as not to be at the mercy of investors who can't see beyond today's bottom line.
~REZ~ #43301. Who'd fake being me anyway?
Once you go public, the company is burdened with a need to focus on short term advantages at the cost of long term development. Quarterly or monthly balances take precedence over longer term plans unfortunately, even if the longer term plans would net more profit.
Beta is broken and the link to classic doesn't work. Stop wasting our time or there won't be anybody left here.
This is about share price. Nothing else. Fire a bunch of people and some similar shenanigans so that the share price would increase and those shareholders can cash in and go off to do the same to other companies.
It has nothing to do with what's good for the company, just what's profitable in the immediate for those particular shareholder.
Same thing is happening at Time Warner, with one of the corprorate raiders of the 1980s who's now one of their shareholders and making a noise for them to sell off lots of good stuff and repurchase their shares so that the share price would increase and he would cash in.
This is the disease of the American economy.