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Novell Rejects "Inadequate" $2B Takeover Bid
alphadogg writes "Novell's CEO wrote to customers Saturday telling them that the software company has rejected a $2 billion bid by hedge fund Elliott Associates to take it private. He called the offer 'inadequate' and said Novell will review alternatives. Novell has struggled financially even as it has reinvented itself from its NetWare network operating roots into an open source (SUSE and Ximian) and management and security software company. Revenue fell 10% during its most recent fiscal year (wrapped up in October) and its net losses widened. CEO Hovsepian's total compensation fell 17% to $5.7 million."
I now own 20% of all first posts!
"CEO Hovsepian's total compensation fell 17% to $5.7 million."
The man's struggling! Send Novell your donations.
Why did Novell not Linux-ify older Netwares? That is to say, make it so that Netware 3.x, and 4.x era IPX and NCP architectures could run on Linux (Think Netware-esque Samba). Back in the day, I could run a program called Mars_new on Linux, and it would permit me to utilize Dos workstations running Netware's Client software. Novell should have done this, make Netware a Linux application, have it go viral to all these orginizations that used Netware.
Let us lose more money so that $2B looks like a better offer!
Your hair look like poop, Bob! - Wanker.
There are companies that really should resist being taken over at low-ball prices. I'm very skeptical about any assertion that Novell is one of them; I'd suspect this is a seriously high-ball price, and yes I mean that in several different senses :-)
That doesn't mean it's easy to work at a company that's been bought for too high a price - I used to work for Company N, which was bought by Company A for (IMHO) about 3x what they should have paid, and 2.5x what Company A could have gotten if they'd started out with a low enough offer and ignore Company N's CEO ranting about hostile takeovers. It was a great deal for the stockholders of Company N, but for the company itself, paying 3x what the company was worth meant that the buyers were expecting to get 3x as much revenue from owning Company N as was realistically available. So they went into radical cost-cutting mode, sold off a couple of divisions, tried a bunch of new things using the skills they imagined that Company N would have if a few people from Company A came over to "help", and when that failed, laid off a bunch of people (including me, but I found another job at Company A about when my severance pay ran out, so basically I got a vacation that was long enough I should have goofed off much more seriously than I did.) Eventually they stopped doing most of the things they were bad at (including some of their main product lines that were being eclipsed by the technology boom), went back to doing the things they actually were good at, and got spun off for a stock price that was about what they were actually worth at the beginning of this whole charade.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
These days most private equity firms are basically vultures - I offer case in point, Chrysler Corporation. They buy out a firm, gut it, wreck it, and then try and unload a few pieces. Rarely does a private equity firm actually ever improve that which it buys.
This is my sig.
There are companies that really should resist being taken over at low-ball prices. (...) It was a great deal for the stockholders of Company N,
So... who exactly should resist?
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Yahoo! of course! Don't you agree!
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Hovsepian is pulling in $5.7 MILLION a year for what?
Why isn't he porting Netware and their other products to GENERIC Linux? Why do they want to tie everything to SuSE?
Because they're idiots who are milking Novell for what they can get out of it while it slides into obscurity.
How many companies can survive on selling a commodity that people can acquire for free? If Linux were to become commonplace even Red Hat might have trouble getting customers to cough up for support they don't really need anymore.
They most definitely do have debt. http://finance.yahoo.com/q/bs?s=NOVL
They don't have "long term debt" but over $800 million in liabilities, $600 million of which has to be paid within a year. So yes, a billion in cash, but plenty of debt as well.
Companies like this is exactly what Elliot et al. wants, liquidize and suck out the billion dollars and throw away the empty shell and all the workers, these hedge funds are the scum of this earth
Are they? Isn't their market share fast declining? For all of the mocking that Sun received prior to their buyout, they had the benefit of not only software that was actually selling, but hardware as well. Novell chucked their own OS over the fantail and basically sells Linux with commercial support now. Billion in the bank or no, they haven't stemmed the loss of mindshare with the SuSe acquisition. If that was supposed to change their fortunes, it failed.
Life is hard, and the world is cruel
Here is a more concise representation of Novell's response to Elliot's takeover bid.
Liabilities are not debt.
They are the short term costs of doing business, and will be reflected in next year's financial statements as being fully paid out of operating revenue.
Debt is simply that ... money you borrowed and will have to pay back some day.
Examples of liabilities are ... employee wages, rents, utilities, paying the contractor who painted your office building, invoices for product delivered (last week) but not yet paid for (once every 30 days, etc), etc. Another (Big) example is shareholder's equity. That is money you technically owe, but never have to pay; if the stock goes to zero there is no payment required to cover that.
It's ongoing business accounting, with the payment coming out of your ongoing sales.
no they aren't. they are worth 1 billion + any assets. the rest is good will, of which they have about 20c worth.
If you mod me down, I will become more powerful than you can imagine....
No, liabilities will be paid with by the company's cash, which theoretically will be replaced by next year's operating revenue. However, If Novell were to stop all operations today, it would have to pay the liabilities it already owes (wages, rent, utilities, invoices, etc.) with it's own cash, BEFORE any money would be paid to shareholders. The same is true if they had any debt. Any liabilities listed are for services or products (employee wages, office supplies) that Novell has already received but not paid for.
Correct that liabilities are different from debt, but you still "owe" either one. My point was that saying "one billion cash with no debt" is misleading. If you're talking about cash the company has in terms of its financial health, you have to mention its liabilities as well.
I'm not sure whether or not you meant that shareholder's equity is a liability, but the two are completely different. You don't pay back shareholder's equity, but you DO have to pay back liabilities.
before the next crash.
Novell owns the copyrights to Unix. That's $4B right there. Once their court case is over and they're cleansed of the SCO debacle Unix will see a resurgence and Novell will ride it for all it's worth. Don't count them out yet - the jury will come back in a week or two. Unix has some serious proper respect in the geek community, and in the business community that has been deferred due to these ridiculous legal actions. Once they're over, they're over and Unix will reclaim its rightful place at the peak of the IS pantheon.
I like Linux, and BSD, and OS-X, and in some ways they're Unixes. But they're not Unix. Unix is the grand-daddy of modern OS's. It's the shit that other OS's hope to emulate and for the most part do it badly.
This is the Unix philosophy: Write programs that do one thing and do it well. Write programs to work together. Write programs to handle text streams, because that is a universal interface.
- Dave McIlroy
In the words of Hank Spencer: "Those who do not understand Unix are condemned to reinvent it, poorly."
It may yet not be time to write off Unix, and so, to write off Novell. Novell lost the war for the network architecture, but there's some hope they can rise like a phoenix from the ashes and reclaim their place.
Help stamp out iliturcy.
Easy money.
T
Laws are horrible moral guides, moral guides make even worse laws.
Um, no. If somebody offered me all of Yahoo for fifty bucks, a case of beer and a carton of smokes, I'd pass.
Help stamp out iliturcy.
Oh, an ex-NCR guy from the AT&T merger days in the early 90s.
So, like me you remember Chuck Exley's rants about AT&T's takeover as being "grossly inadequate"?
It has been downhill ever since for NCR, even post spinoff ...
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Novell...I didn't know they were still around. When someones says "Novell" I think of Lantastic, Banyan Vines, 100VGAnyLan, etc. NT4.0 ate their lunch and had freaky buttsex with their mom. My first NOS was a pirated copy of 3.11 (20 floppies) running on a 12MB 386DX 33 with a 90MB hard disk. Someone gave me two Arcnet cards (ARCNET!) and I was all set. The first time I saw that F: drive in Windows 3.11 I got so stoked I lived and breathed Netware and was CNA the next month and CNE about six months later. I was having a great time and these were the days when knowing a few DOS commands would get you a gig as sysadmin. I expect another graying veteran will point out that 3.11 needed (officially) 16MB to load. I spent hours tweaking the thing to get it going in 12MB. Now get off my lawn!
I wonder if this could be traced to SCO and Yarrow. If Novell ended up going away, SCO would be free to try their questionable legal tactics again to get money from Linux users. Just tinfoil hat speculation.
It's ongoing business accounting, with the payment coming out of your ongoing sales.
Assuming you have sales, which might not be the case for them in a couple of years.
The distinction you are trying to make is between debt capital (e.g. bonds, long term bank loans, any thing else that is financing) and other liabilities. Shareholders equity is not shown as a liability, and is not connected to the share price.
The number you want is net assets, but it is not really relevant to valuing a company link Novell except for establishing a floor to the valuation.
You may need a sum of parts valuation (I am not sure how diverse Novells businesses are), but a simple profit multiple may do.
Novell's management have got some key shareholder backing for rejecting the offer, so they are not the only ones who think they will get more.
Back when Novell bought SUSE they wore lining up to be the most important company of all. They had a core service, eDir, that let them connect Linux, Windows and Mac computers together and collaborate in a coherent way. They could be the spider in the net, connecting it all in the background. Microsoft would never even touch that market with a ten foot pole so they wouldn't compete directly with MS.
Then came a series of very bad decisions like only (barely) support their own Linux version. kind of made their core service suck since you couldnt use it with any other Linux distribution than SUSE. They made a strange decision to use mono for their services. Things that was pretty reliable, like Zenworks completely blows with mono. Zenworks 10 is something your lucky if you get working, if you get a function realiable, go buy a lottery ticket. They made DSFW, domain services for Windows. A hard complicated and cumbersome way of running an AD. Why on earth would i want to run AD even crazier than on Windows?
The patent agreement with Microsoft was the real letter of resignation. They had the technology to capture a untapped market. The customers existed everywhere (what company today dont have Linux machines all over?) and they could help them with very little effort because their core services was ready to go and much of them already worked on Linux. It was just a matter of compiling and testing.
My theory is that upper management knew this and still opted for a quick buck. They sold their shareholders out in the long run, killing the company in the process.
HTTP/1.1 400
I will never forgive Novell for Groupwise. Pure evil in a red and white box.
lucm, indeed.
It seems like public schools everywhere (up here in Maine, U.S. anyway) still use Netware for everything. I've always thought it would make sense for Novell to migrate them to a Netware/SuSE solution. The kids would win, because (hopefully) a Microsoft-free solution would be a lot cheaper for the schools, and Novell wins by keeping customers who will otherwise inevitably leave their platform as it ages.
4.1 was the first version you could get a CNA for...before that it was only CNE. Your memory is going as you get old...
He's talking about Netware 3.11, not Windows anything.
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Netware is declining yes, but SLES/SLED/OpenSuse is still one of the top distros in download numbers. A quick peek at their financials will show you that they actually grew their linux sales by about $13million in the last year - not too bad in a crappy economy.
Yeah, DMZ bought Chrysler certainly to ruin it.
DMZ basically bought Chrysler because they Chrysler with a looming rear wheel drive and semi-luxury brand that threatened everything DMZ was trying to do with Mercedes in the middle market. Chrysler also had a ton of money in the bank and so DMZ basically took the cash and spent it. The Bush administration should have -never- approved this sale.
CCM stuck the fork in it. CCM has never had a good reputation as a firm that wanted to build anything. What CCM tried to do was basically halt Chrysler's development, which is why they have no new product out there right now, and then, sell it to someone else. It was, for them, like buying something on ebay and selling it again. If CCM were serious about Chrysler, they might have invested in new product development and they simply didn't. Look at how many stories leaked about CCM trying to unload the company. Fiat was always in play but there was also a lot of speculation and conversations with GM.
This is my sig.
they DUMP miguel mono boi and his crap!
I wouldn't touch them with a 10000ft pole. Huge legal liability with that mess.
Plus it would take so much to clean up SLES and OpenSUSE to restore it back to its previous stature as a top of the line distro.
When you dump miguel mono boi, then you might be worth more than US $0.000001/cents.
1311393600 - Back to Black
The market disagrees with both of you - market cap is 1.96B.
http://www.google.com/finance?q=novl
Of course, a takeover bid usually involves a significant premium, so offering 2B seems low.
Imposing Libertarian views on everyone online since 1992.
What I would to know is why the banks fall for it.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
Sounds like Skype after their acquisition by eBay. (I'm sure it's not, but the same thing happened inside Skype, compounded by the stupidity of eBay execs).
libguestfs - tools for accessing and modifying virtual machine disk images
Yes they also sell SLES as a stand alone product but I got to set the record straight, they also sell netware under a new name.
I keep hearing this, but no, Novell did not chunk netware, I run it every day...current and fully supported and I am about to renew my support for it as it is due next month. Netware used to run on its own micro kernel that used dos to bootstrap it originally, but now the netware services can also run on Linux so they went that route recently unless you want to run it the traditional way. If you buy OES2 basically you get SLES with an add on disk OES2 (and the 6.5 netware also when you can run if you want and its 100% compatible with OES2 and they can be in the same eDirectory aka NDS tree) which gives you all the netware services.
Here is a link to the open enterprise server 2 product page, in case you need a reference. http://www.novell.com/products/openenterpriseserver/
" ... The distinction you are trying to make is between debt capital (e.g. bonds, long term bank loans, any thing else that is financing) and other liabilities. Shareholders equity is not shown as a liability, and is not connected to the share price. ..."
True; I was referring to where shareholder's equity appears on the liability side of the balance sheet. Assets less liabilities = shareholder's equity; in other words it's whatever number required to make liabilities + shareholder's equity equal assets.
A retail grocer, for example, must have a stock of groceries and other merchandise to sell to customers. The grocer must also have wrapping supplies and store equipment to serve customers properly and efficiently. Besides these, a supply of cash must be on hand for making change and paying expenses. This property is called the assets of the business. A business owner often obtains some of these assets by purchasing them on credit and promising to pay for them at some future date. The persons to whom these debts are owed are called the creditors of the business. They have claims against the assets until the debts are paid. The creditors’ claims are called liabilities of the business. If the assets are owned free of debt, the proprietor may claim their entire value. If there are liabilities, the proprietor can claim only the value that remains after deducting the liabilities from the as- sets. This claim against the assets is called a proprietorship or capital.