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4/19/2006
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Novell CEO Wants Closer Relationship With Oracle

Novell Chairman Jack Messman declined to comment on industry buzz about possible acquisition talks with Oracle, but he didn't deny that he'd like to get friendlier with the database giant.

Novell Chairman and CEO Jack Messman on Wednesday declined to comment on industry buzz about possible acquisition talks with Oracle, but he didn’t deny that he'd like to get friendlier with the database giant.

Speculation about Oracle acquiring Novell or another open-source play by Oracle surfaced after Oracle CEO Larry Ellison reportedly told the Financial Times that it would make sense for his company to distribute and support Linux and that Oracle considered buying Novell. In addition, Linux leader Red Hat last week unveiled a deal to buy open-source middleware powerhouse JBoss.

"Oracle's comment helps validate Linux in the marketplace, and they have integrated open-source technology into their products, tools and middleware,” Messman said in a conference call on Novell’s acquisition of e-Security. "We have a good relationship with them, and I think the Red Hat-JBoss deal will cause us to have an even closer relationship with them."

The JBoss deal makes Red Hat a key middleware rival to Oracle and leaves Novell, which is Red Hat's key Linux rival and has a tight JBoss partnership, in an uncertain position.

Messman wouldn’t talk about speculation that Oracle is in negotiations to buy Novell but said it has no bearing on Novell's acquisition of e-Security.

"Absolutely none. It's a a deal we've been working on for some time," Messman said. "We don't react to rumors. We're just focused on executing our strategy."

Novell's strategy includes security and identity management, but its biggest bet is in the operating system arena. Novell hopes to convert its NetWare installed base to Linux and entice a new class of Unix, Windows and other OS users to the Linux platform it bought from Germany-based SUSE in 2004.

Some industry analysts believe an Oracle-Novell merger could happen. "Some type of Oracle action along these lines would not surprise us, and we would expect Red Hat shares to come under temporary pressure, as they did when Novell acquired SUSE and [Wall] Street temporarily believed that this would adversely impact Red Hat," said analyst Mark Murphy of investment firm First Albany.

As the No. 2 supplier of Linux distributions to U.S. corporate customers, Waltham, Mass.-based Novell has formed close partnerships with open-source backers such as IBM, Hewlett-Packard and JBoss, as well as launched several open-source projects and bought open-source firms such as Ximian.

Messman said during the call Wednesday that Oracle has become a good open-source corporate citizen and has made contributions to open-source projects like Apache and Eclipse and most recently to the Linux kernel, with the inclusion of Oracle Clustered File System (OCFS). Novell's SUSE Linux Enterprise Server 10, due out this summer, offers tight OCFS support.

Earlier this week, Oracle Co-President Charles Phillips acknowledged the Redwood Shores, Calif.-based company’s growing interest in open source and Linux, but he was pessimistic about buying a Linux company. Such a deal, observers noted, would shift the dynamics of the software market, plunging Oracle into the operating system business against Red Hat and Microsoft.

"We view open source as a friend of ours. We'll continue to review selected opportunities in open source," Phillips said Tuesday in response to a question about a possible Linux company purchase during a conference call with analysts and media.

"At the same time, we don't believe in paying ridiculous prices, because at the end of the day you don't own the intellectual property behind it," Phillips said. "So we view it as a good thing for customers, [and] we want to help the phenomenon if we can, but within reason. You'll see other things happening, and as our strategy evolves, we'll have more to say."

BARBARA DARROW contributed to this story.

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