Rumours of a Netscape takeover of Novell re-emerged in Wall Street last week causing shares in Novell to rocket by 26 per cent.
Whispers of a takeover of Novell have been rife for a few months fuelled by the abrupt departure of former chairman Bob Frankenberg last August. It is the first time that shares have surged on such rumours. Novell?s stock increased from $2.375 to $11.50 on close of Friday 8 November. The company?s stock was at its lowest on 31 October at $8 a share and was at its highest at $19 last November.
However industry analysts question the synergy of the two companies. Clive Longbottom, analyst at research firm Meta Group said: ?I?ve always said that if Novell?s shares fell to $9.50 it would be ripe for takeover. Novell maintains that it is worth $7bn but it would be easy to pick it up for $2.5bn to $3bn.?
Longbottom does not believe Netscape has the financial clout to buy Novell but speculated a bid by AT&T would make better sense. ?AT&T already has Novell as a highly preferred partner. AT&T could use Novell to help it sell to network people rather than telecoms managers,? he said. The telecoms supplier could use Novell?s intranet groupware offering called IntranetWare to link organisations together instead of using expensive leased lines. Also the support of NetWare Directory Services on all AT&T platforms could make the telecoms supplier very attractive. Longbottom said Meta Group believed an AT&T/Novell union would be the strongest.
He dismissed other prospective contenders: IBM because it is still busy digesting Lotus Development, Sun because ?there is no fit whatsoever, but Sun taking over Netscape would be interesting,? and Microsoft which would cause the US Justice Department to slap another monopolies investigation on it. He believes a Cisco takeover of Novell would be ?off the wall but would make sense?.
Ashim Pal, an analyst at Ovum, disagreed that Novell is up for sale or that Netscape would bid for it but agreed that a takeover would make sense. ?Netscape lacks a channel into an infrastructure of installed base nor does it have a migration path to help it sell into corporates,? he said citing Novell?s ability to sell its intranet offerings via NetWare.
Novell could win by gaining Netscape?s mindshare of the intranet space. ?I think it?s unlikely that the rumour is true. Jim Barksdale, chief of Netscape said he has not spoken, will not speak and will never speak about mergers; Netscape?s posture seems to be a standalone one. On Novell, I get the impression that it has started to ramp-up its intranet marketing -- it does have its own story to tell.?
Neither Netscape nor Novell would comment on the rumour. Novell?s revenues for 1995 were $2.041bn and Netscape?s were $80.7m.
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