Tough times have recently been the rule for many high tech suppliers. Novell, which has had six straight down quarters and saw revenue dip by more than 10% in 2009, now is trying to ward off an unsolicited takeover bid, a scenario that raises questions about the companyï¿¼s long term viability.
Tough times have recently been the rule for many high tech suppliers. Novell, which has had six straight down quarters and saw revenue dip by more than 10% in 2009, now is trying to ward off an unsolicited takeover bid, a scenario that raises questions about the companyï¿¼s long term viability.Novellï¿¼s revenue dropped from $957 million in 2008 to $862 million in fiscal 2009, which ended in October. Earlier this month, hedge fund specialist Elliott Associates, L.P. offered about $2 billion to purchase the company and take it private. After mulling the offer for a few weeks, Novell rejected it, deeming the bid inadequate because if undervalues the companyï¿¼s worth.
Once a network industry leader and worth quite a bit, Novell has had a checkered history in the past decade. The companyï¿¼s NetWare network operating propelled it to acceptance. Gradually, Microsoft became a player in that space and eventually usurped Novellï¿¼s position. The vendor then tried various diversification schemes, such as purchasing Unix System Laboratories and recently focusing on open source software, such as Linux SuSE. However, the company has not been able to capture its lost glory and been basically muddling along.
So the rebuff of Elliott Associates may only be temporary. With Novell on a downward cycle, the offer seems reasonable. The vendor may be posturing to try and squeeze more money or possibly concessions from its suitor. Such a plan would only work if other bidders emerged. With the current economic doldrums, it may be hard for the company to find another interested party, but he cat and mouse game could drag on for a few more months.
Taking Novell private would provide Elliott with a way to revamp the company and make it operate more efficiently. The hedge fund could also cash out by selling off parts of Novellï¿¼s business. While such changes could help Novell long term, the alterations will hurt small and medium businesses short term. Novell employees have to be distracted by the talk and not 100% focused on their jobs. Customers also have to question the viability of making addition investments in Novell products. In the end, the takeover talk will not benefit Novell ï¿¼ or its customers.
5 Top Federal Initiatives For 2015As InformationWeek Government readers were busy firming up their fiscal year 2015 budgets, we asked them to rate more than 30 IT initiatives in terms of importance and current leadership focus. No surprise, among more than 30 options, security is No. 1. After that, things get less predictable.
Join us for a roundup of the top stories on InformationWeek.com for the week of April 24, 2016. We'll be talking with the InformationWeek.com editors and correspondents who brought you the top stories of the week!