Novice Investing - Opening Up Novell Earning Report

Date: Thursday 07th 2008f August 2008 01:44:50 PM

Opening Up Novell Earning Report - 06/06/2007

By: Novice Investing Staff

Our stock portfolio holding, Novell Inc. (NOVL) reported earnings this past week. This is the first full quarter since the Microsoft deal announced late last year. For the quarter ending on April 2007, Novell reported revenue of $ 239.2 Million, down sequentially. Earning came in at $ 0.05 per share versus $ 0.01 expectation. That is enough to propel the shares up 4% during the day of the announcement. For the full year, Novell expected revenue in the range of $ 925 M to $ 955 M, well below our revenue projection for 2007.

Meanwhile, we expect Novell to post $ 0.15 per share profit for 2007. While one quarter's number does not break or make the whole year, with $ 0.05 per share profit last quarter, Novell is still on pace to reach that goal. Shares of Novell has risen further as it announced that it will be making acquisitions and buying back stocks. As it completed its option backdating audits, Novell find no past wrong doings. Therefore, the company can now use its war chest to enhance shareholders value.

With its war chest of around $ 2.16 per share, or 33% of its market capitalization, Novell can do plenty to buyback its own shares. The problem is with acquisitions, Novell can only buy so much. Other competitors has grown larger and with private equity firms luring, there is not much company left to be taken over.

Regardless, Novell shares has risen up to above $ 8 per share, 38% above our buying price. We have noted in the past that Novell is worth about $ 7.50 per share using our conventional fair price calculation. However, it already go beyond that and we haven't decided at which point we should sell Novell shares.

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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Novell Inc. (NOVL) or any other securities.

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