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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."
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.
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.
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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.
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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
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, 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.
Easy money.
T
Laws are horrible moral guides, moral guides make even worse laws.
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.
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Uh, what? First of all, Mac OS X is UNIX - the trademark is not owned by Novell, it is owned by The Open Group and is awarded to any system that is certified as conforming to the latest version of the Single UNIX Specification.
But since you're talking about the UNIX that Novell owns, we're talking about UNIX System V, which was licensed to a lot of people. Novell doesn't have anything like a monopoly on it, because companies like IBM have had it for a long time and been incrementally improving it. I'm not seeing AIX outselling Linux, FreeBSD or Mac OS X, and I wasn't even before the SCO case.
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One is the concept (and posix interface). I can't think of a single OS from the past 20 years (except classic MacOS and some RT stuff) that isn't heavily influenced by unix/posix here (Windows NT has/had a posix layer). This doesn't do jack shit for novell.
One is trademarked term and certification from The Open Group. OS X, AIX, and Solaris are the only 03 Unix certified OSes, AFAICT. This doesn't do jack shit for novell.
One is the legacy pile of code that novell owns and licenses. Nobody cares about it and it's not worth $4 billion. Oracle will continue to sell Solaris and IBM will continue to sell AIX but that doesn't do jack shit for novell aside from some minor license revenue.
Do you even lift?
These aren't the 'roids you're looking for.
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.
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