Sometimes, investors have the right to attack Novell. But this time around, at least one financial analyst firm seems to be beating up on Novell for a rather foolish reason. Here’s the scoop, from The VAR Guy.
First, a little background. The VAR Guy does not give investment advice. Nor is his favoring Novell over other Linux distribution providers.
Instead, he’s merely pointing out a rather foolish fact: Jeffries analyst Katherine Egbert has downgraded Novell’s stock because Novell wants to use its cash to pursue acquisitions rather than dividending it back to share holders, according to Barron’s.
Let’s make sure The VAR Guy understands Egbert’s logic:
- Technology company valuations continue to fall during the recession.
- Novell needs to strengthen its position in the data center.
- Many small start-ups will be looking for exit strategies during the recession.
- Many of those start-ups are therefore willing to take lower offers than previously anticipated.
And Egbert is suggesting Novell pay dividends rather than make acquisitions? Frankly, Egbert’s logic doesn’t add up. When company valuations are falling fast, that’s when you comb the market for great buying opportunities.
Novell’s commitment to making targeted acquisitions is the right one.
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I’m shocked because I’m siding with Novell on this item. The recession is prime time for Novell to go bargain hunting in the software market. Forget the dividend; buy talent and technology, Novell.
Johnny Bravo: Sweet name. You have good taste in classic situation comedies … and blog sites.
Egbert is always wrong about Red Hat and Novell. Just ignore.
When I was selling Novell software, I owned the stock so I tracked it almost day-to-day until I sold it all in August of 2000 for around $11 a share. I was happy to get out but then it went to $2 and came back above $11 years later, there was money to be made there, but I was out. Then since it peaked at $11 in Jan 2004 it has gone down, down, down and the recent spike above $4 was hopeful, not only for techstocks in general, but maybe the street was getting positive signs? Notta, it is now back down to $3.75. There is money to be made in the swings back and forth, but I would recommend a safer stock: MSFT which is in its trough and no longer doubling every one to two years and splitting, but nonetheless it pays a dividend and I am reinvesting the dividends and just got 1.7 shares on this last month’s statement. Not bad, huh?? PS Overall I made money on Novell stock and selling the software over the years, so thanks Novell!