With staff cuts almost a certainty and pressure coming from some investors for massive changes, analysts look ahead to Novell's future.
Novell has had better days.
Sources within Novell Inc.
have confirmed that the company will lay off as much as 20 percent of its work force of 5,800 employees by years end.
Officially, all that Novells global PR director, Bruce Lowry, has to say is: "Novell wont comment on rumor and speculation. As we indicated on our Q3 call, we will be making some cost cutting moves. When we are prepared to make public what those are, we will."
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That said, sources still indicate that the layoff announcement will happen on Oct. 31stHalloween.
At the same time, still other sources indicate that Blum Capital Partners LP
, with the support of CSFB (Credit Suisse First Boston
) will try to gain more influence on Novells board.
Both investment firms believe that Novell has been under performing in the marketplace. In particular, the companies want to see Novell cut its costs, focus more on Linux, divest itself of some of divisions and buyback some of its shares so as to increase the remaining shares price.
Blum, in fact, took the unusual step of publicly announcing what specific steps it felt Novell had to take
to maximize its potential. Blum, after suggesting the changes privately, went public with them after Novells disappointing third-quarter results
in late August.
While Novell subsequently implemented some of the changes suggested by Blum, the Waltham, Mass.-based company fell far short of what Blum wanted.
For example, Novell started a share repurchase program of up to $200 million of Novell common stock in September. At the time, Jack Messman, Novells chairman and CEO said, "Our stock buyback is just one of the elements of a plan aimed at enhancing shareholder value and securing Novells future as an important provider of solutions to the IT market."
However, Blum had wanted a share repurchase program of $500 million for Novell.
So, what does all this mean for Novell?
Gordon Haff, senior analyst for research house Illuminata Inc. doesnt see a fundamental difference between what Blum and Novell wants.
"There may be less a disagreement of general direction than of speed and urgency," said Haff.
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