Credit Suisse castigates Novell
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Novell "lacks vision, strategy and execution."
7 September 2005 An analyst from Credit Suisse First Boston (CSFB), the banking arm of investment group Credit Suisse, has demanded that management at software maker Novell take drastic action to address its continuing dismal performance.
CSFB, which owns 1% of Novell's shares, criticised the company for underperforming. "In our opinion, the company has the requisite assets to be a much more profitable enterprise, but it lacks the vision, strategy and execution," wrote CSFB analyst Jason Maynard in an open letter to the Novell's board of directors.
The astonishing attack follows a succession of lackluster quarterly results by the software company.
For its fiscal quarter ending 31 July 2005, Novell reported revenues of $290 million, down from $305 million in the same period in 2004. Meanwhile, profits for the quarter were just $2 million, plummeting $22 million from $24 million for the same quarter a year earlier.
Novell was once a leading light in network operating systems, but has suffered at the hands of software giant Microsoft ever since the latter introduced Windows 3.1.1 in the early 1990s. That version of Windows was the first to bundle desktop operating systems and network operating systems together.
Similarly, its WordPerfect word processing software lost out to Word for Windows as Microsoft Office became the desktop application suite of choice.
Although the company has made some strategic moves, such as the acquisition of open-source SuSE Linux, Novell is still struggling to transform itself. In his letter, Maynard attributed this to poor leadership on the part of chairman and CEO, Jack Messman. He proposed hiring co-founder of BEA Systems, Bill Coleman, as a strategic move.
The letter outlined four key steps to improve Novell's fortunes: new management, cost cuts, focusing more on Linux and share buybacks.
In anticipation that its recommendations are taken on board, CSFB has upgraded Novell's stock from "underperform" to "outperform".
