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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."
Maybe there's truth in the notion then that Sun might buy Novell. If it doesn't buy Red Hat first, as Mark Hinkle here seems to think it might.
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
targeting Novell's two corporate jets, its "overstaffed" R&D department
I wonder by cutting its overstaffed R&D department if they really just mean move them all to China?
I guess the execs will need those corporate jets to fly back and forth to China in style so they can visit their lower-paid works occasionally.
I'm a big tall mofo.
Never underestimate the dark side of the Source
Novell is still in a changing state in finding itself again. Microsoft's taking over the server market has left Novell perpetually staggering. While Novell still has a server stake and their stake is being re-situated on a Linux base, they need to apply all they can on R&D in order to get themselves wedged into the desktop market. For shops that are already Novell, adopting a strong and maintainable desktop environment based on Linux would be less difficult that convincing an all-Microsoft shop. They have a foot in the door but they need to apply a lot more R&D to make another step.
These damned short-sighted share-holders, while on the short term build captial and value in a company, seem to be the long-term downfall of creativity and improvement. (Not to mention the driving influence in removing ethics from business practices to the point of criminal acts.)
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.
Just yesterday I was cycling through the KVM on a rack of machines in a server room, and one of the boxes, apparently untouched for over 3 three years, had puked just that morning (on a RAM hiccup, or something similar), and did the old Novell equivalent of a BSD. The funny thing (other than the timing) was that no one with any interest in the infrastructure could come up with the slightest idea what that machine was actually supposed to be doing. Right now the plan is to leave it off until some dev guy screams (or, payroll doesn't go through, or another equally dramatic land-mine type event).
But the point is, that machine would appear to have gone from Important To Somebody Who Really Liked Novell to, well, Complete Obscurity in a pretty short time. Not entirely representative of Novell's current corporate state of affairs, but in retrospect, the whole thing was sort of poetic. Plus, the users in question are now about to pay for an audit of what the hell actually is running in their server room.
Don't disappoint your bird dog. Go to the range.
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
It is about time to write to you Congress rep to asking that Congress demand that the Justice Department investigate this abuse of the courts to stiffle competition
Um... I don't think "pressure from investors" is quite the same as "abuse of the courts."
Since we (pretty much) know MS...
Yes, they were also behind the fake moon landings, and are really Halliburton's Seattle office. *sigh*
Don't disappoint your bird dog. Go to the range.
I hope this doesn't harm the Mono project, which Novell has been a vital part of. I have great hope for this project. But I'm not sure how it helps Novell's bottom line, so it might be the kind of thing that goes on the chopping block.
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.
Comment removed based on user account deletion
""We are disappointed in not only your failure to consider our proposals but also at the clear lack of urgency in implementing a strategic plan,""
Gee maybe if they weren't busy trying to defend their business in frivolous lawsuits like sco then maybe they could concentrate and spend money on their actual business.
Sounds like to me just a blowhard that either sco or microsoft or sun got a hold of to distract the company from the issues at hand.
I fully support Novell in what they are they doing. Just because their busines model doesn't meet the standards of a convicted monopolist doesn't mean a thing. I got some of the longest uptimes on my servers from SUSE linux. To me that is what makes a business model. Fricken reliability - what a concept.
Their NDS still rocks and runs on any platform. It blows Microsoft AD crap away.
I am still waiting on sco's response to novell which I believe should be coming up real soon.
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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I can't agree that Netware is completly at a dead end. To be sure it isn't a rapidly growing market but it isn't shrinking so fast either, the last time I met my Novell salesperson he said they still had over 400 Million Netware user licences under maintenance. Even if they lose 10% per year that still deserves heavy R&D.
Novell has a clear strategy here, with the latest Netware you can run either the Netware or SuSE kernel. My guess is that eventually Netware will ship with a Linux core by default but a number of people will continue to buy it for all the value add features. Within 5 years you will then see a single core O/S sold and you will then be able to buy services such as eDirectory, file and print management, Zenworks etc. as the value add profitable services.
Novell simply can't move out of Netware quickly, many infrastructure systems rely on it (I know of one airline booking systems and 2 cash machine networks in the Uk which still rely on it and I'm sure there are many, many more).
IBM made a huge mistake in abandoning OS/2 with nowhere for its customers (especially embedded system / POS customers) to move to. Novell has proved once again the value of their maintenance contracts by fully supporting all their existing OS customers until they have a smooth migration plan to SuSE.
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.
Why the hell would they want to sell Zenworks? That's probably still the best mass software deployment engine out there and it has been for over 6 years. Likewise Groupwise is another product that has a huge base and cements a Novell presence in the workplace.
I'm all for doing more for Linux, etc. But Novell would be stupid to give up a couple of their secondary jewels. (The prime jewel being NDS of course...)
Acquiescence leads to obliteration
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!"