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Novell Rejects "Inadequate" $2B Takeover Bid 111

Posted by timothy from the come-back-with-a-real-offer dept.
alphadogg writes "Novell's CEO wrote to customers Saturday telling them that the software company has rejected a $2 billion bid by hedge fund Elliott Associates to take it private. He called the offer 'inadequate' and said Novell will review alternatives. Novell has struggled financially even as it has reinvented itself from its NetWare network operating roots into an open source (SUSE and Ximian) and management and security software company. Revenue fell 10% during its most recent fiscal year (wrapped up in October) and its net losses widened. CEO Hovsepian's total compensation fell 17% to $5.7 million."
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Novell Rejects "Inadequate" $2B Takeover Bid More

Novell Rejects "Inadequate" $2B Takeover Bid

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  • First takeover post! (Score:1, Insightful)

    by Anonymous Coward

    I now own 20% of all first posts!

  • Sympathy for the poor (Score:1, Funny)

    by Anonymous Coward
    "CEO Hovsepian's total compensation fell 17% to $5.7 million."

    The man's struggling! Send Novell your donations.

  • Why did Novell not Linux-ify older Netwares? (Score:3, Interesting)

    by Zombie Ryushu ( 803103 ) on Saturday March 20, 2010 @10:24PM (#31554830)

    Why did Novell not Linux-ify older Netwares? That is to say, make it so that Netware 3.x, and 4.x era IPX and NCP architectures could run on Linux (Think Netware-esque Samba). Back in the day, I could run a program called Mars_new on Linux, and it would permit me to utilize Dos workstations running Netware's Client software. Novell should have done this, make Netware a Linux application, have it go viral to all these orginizations that used Netware.

    • Re:Why did Novell not Linux-ify older Netwares? (Score:4, Informative)

      by bbqsrc ( 1441981 ) on Saturday March 20, 2010 @10:54PM (#31554956) Homepage
      Isn't that essentially what OES2 is? Except for the fact it's locked to SLES, that's basically what it is, Netware on Linux.

    • Because they're idiots. (Score:3, Interesting)

      by khasim ( 1285 )

      Hovsepian is pulling in $5.7 MILLION a year for what?

      Why isn't he porting Netware and their other products to GENERIC Linux? Why do they want to tie everything to SuSE?

      Because they're idiots who are milking Novell for what they can get out of it while it slides into obscurity.

      • Re: (Score:3, Insightful)

        by gravos ( 912628 )
        I dunno, anyone who's managed to con their way into making $5.7 mil / year probably isn't an idiot. A slimy, greedy jackass, perhaps, but probably not an idiot.

      • What is "generic" Linux? Isn't OpenSUSE generic enough?!

    • Re: (Score:3, Interesting)

      by Anonymous Coward

      And how about their filesystem where if the file wasn't overwritten yet, you could simply undelete it, even as a user, including only seeing your own files for undeleting. I know it's possible to do something almost similar with snapshotting, but the default linux filesystems don't support that, and with the filesystems that do the functionality is still not the same (automatic removal of oldest files from snapshots as the disk fills up?), and it's not as easy to setup and use, and it's not integrated with

    • One can always tell people who post comments about products they have no clue about.

      Novell did "Linux-ify" their platform. It started with NetWare v5.0 back in 2000. OES on Linux was released in 2005. Where have you been for the past 5 years, by Zombie Ryushu?

      NetWare v5.0 had a CLIB, Java VM and JVM-based XWindows GUI. It also supported CIFS. By NetWare v6.0, in 2003, they'd added a BASH shell, RPMs, ZLib and a lot more Linux components.

      NetWare v3.x had been completely EOLed by 1999, and NetWare v4.x by 200

    • Re: (Score:2)

      by drolli ( 522659 )
      Thata exactly what i think would have made them much bigger than they are now. Back in the day big organizations had netware installations spanning 1000s of machines. When i think what our university computing center would have payed back then for a officially supported solution to unify unix and netware servers (e.g. if novell delivered their servers based on solaris) while not having the hassle of switching the clients withing a small timespan and having infinite connectivity and hardware-choices on linux

    • Re: (Score:2)

      by SEE ( 7681 )

      Why? Lack of vision. Basically, while Linux was emerging, Novell was busy divesting itself of all Ray Noorda's Unix purchases in favor of concentrating on the "core competency" of selling the profitable NetWare, because their stock price was suffering from attempts to expand into other areas. For their lack of vision, they got eaten alive.

      The vision of NetWare-on-(Unix|Linux) was continued over at a new company, called Caldera, founded by Novell people and financed by Ray Noorda. That company wound up p

    • Re: (Score:2)

      by Eskarel ( 565631 )

      Because they can't.

      Those older Netware versions are written so closely to the hardware that they cannot even be run as virtual machines, they just will not run without direct access to the hardware. That's one of the primary reasons they ditched Netware for OES(which is pretty much what you asked for, Netware systems running on Linux).

      The real problem they face is that You cannot upgrade from Netware to OES in situ, you have to create an entirely new instance and, since Novell's products don't modify well i

      • Those older Netware versions are written so closely to the hardware that they cannot even be run as virtual machines

        I suspect that you'll find the main reason for this is that they actually used rings 1 and 2. Netware modules ran at any one of the four privilege levels that the IA32 architecture allows. Most operating systems only use rings 0 and 3, so most VMs don't bother adding support for the other two. There was a project a while ago to port Netware to run on top of Xen, but I don't know what happened to it.

      • Re: (Score:2)

        by SEE ( 7681 )

        Because they can't.

        "Portable NetWare" (later called "NetWare for Unix") was running on Unix back in 1989. Yes, in-situ upgrades are a bitch, but there was pretty much no barrier at all to shipping "NetWare for Linux" back in, say, 1996, except for the lack of vision in Novell's executive suite.

  • Let us lose more money so that $2B looks like a better offer!

    • He wants to try to pull an even bigger 'Yahoo' than Yang did last year [rejecting a bid that values your company more than it possibly could be worth in the next ten years]...

      • Maybe Yang just didn't want to sell out to Microsoft? After all, we'd all have to get new email accounts if he did.

        • Re: (Score:2)

          by jbengt ( 874751 )
          And maybe Yahoo realized that the MS stock offered in the deal would have dropped greatly in price as a result of the deal.

  • Dummy! Take the money and Run! (Score:5, Interesting)

    by billstewart ( 78916 ) on Saturday March 20, 2010 @10:35PM (#31554854) Journal

    There are companies that really should resist being taken over at low-ball prices. I'm very skeptical about any assertion that Novell is one of them; I'd suspect this is a seriously high-ball price, and yes I mean that in several different senses :-)

    That doesn't mean it's easy to work at a company that's been bought for too high a price - I used to work for Company N, which was bought by Company A for (IMHO) about 3x what they should have paid, and 2.5x what Company A could have gotten if they'd started out with a low enough offer and ignore Company N's CEO ranting about hostile takeovers. It was a great deal for the stockholders of Company N, but for the company itself, paying 3x what the company was worth meant that the buyers were expecting to get 3x as much revenue from owning Company N as was realistically available. So they went into radical cost-cutting mode, sold off a couple of divisions, tried a bunch of new things using the skills they imagined that Company N would have if a few people from Company A came over to "help", and when that failed, laid off a bunch of people (including me, but I found another job at Company A about when my severance pay ran out, so basically I got a vacation that was long enough I should have goofed off much more seriously than I did.) Eventually they stopped doing most of the things they were bad at (including some of their main product lines that were being eclipsed by the technology boom), went back to doing the things they actually were good at, and got spun off for a stock price that was about what they were actually worth at the beginning of this whole charade.

    • Re: (Score:2)

      by Kjella ( 173770 )

      There are companies that really should resist being taken over at low-ball prices. (...) It was a great deal for the stockholders of Company N,

      So... who exactly should resist?

    • Oh, an ex-NCR guy from the AT&T merger days in the early 90s.

      So, like me you remember Chuck Exley's rants about AT&T's takeover as being "grossly inadequate"?

      It has been downhill ever since for NCR, even post spinoff ...

  • Good move by Novell's part (Score:5, Insightful)

    by tjstork ( 137384 ) <todd@bandrowsky.gmail@com> on Saturday March 20, 2010 @10:42PM (#31554890) Homepage Journal

    These days most private equity firms are basically vultures - I offer case in point, Chrysler Corporation. They buy out a firm, gut it, wreck it, and then try and unload a few pieces. Rarely does a private equity firm actually ever improve that which it buys.

    • Novell's response to Elliot (Score:1, Funny)

      by Anonymous Coward

      Here is a more concise representation of Novell's response [wordpress.com] to Elliot's takeover bid.

    • Re:Good move by Novell's part (Score:4, Interesting)

      by ishobo ( 160209 ) on Sunday March 21, 2010 @12:38AM (#31555368)

      Chrysler was saved by CCM. Daimler was the one that wanted to break apart the company and sell the peices. CCM was serious about reinvigoratinig Chrysler, that is why the lured Jim Press away from Toyota. Chrysler's problem was its recovery coincided with the worldwide recession. At that point, CCM had nowhere to go.

      • Yeah, DMZ bought Chrysler certainly to ruin it.

        DMZ basically bought Chrysler because they Chrysler with a looming rear wheel drive and semi-luxury brand that threatened everything DMZ was trying to do with Mercedes in the middle market. Chrysler also had a ton of money in the bank and so DMZ basically took the cash and spent it. The Bush administration should have -never- approved this sale.

        CCM stuck the fork in it. CCM has never had a good reputation as a firm that wanted to build anything. What CCM tr

        • Re: (Score:2)

          by ishobo ( 160209 )

          You need to learn your history, and please take a remedial reading class.

          CCM's reputation is irrelevant to what did happen. I never said Daimler bought Chrysler to ruin it. When daimler came to the realization that the acquistian was a bad idea and they needed to divorce themselves from Chrysler, their plan was to sell the pieces, as pieces would fetch more money than the whole.

    • Funny you should use the 'vulture' analogy, because it implies the company taken over is already 'dead'. Even 'vultures' serve an important function in the 'ecosystem', movies like "Pretty Woman" not withstanding!

  • I'm not surprised (Score:3, Interesting)

    by ClosedSource ( 238333 ) on Saturday March 20, 2010 @11:11PM (#31555020)

    How many companies can survive on selling a commodity that people can acquire for free? If Linux were to become commonplace even Red Hat might have trouble getting customers to cough up for support they don't really need anymore.

    • Re: (Score:1, Insightful)

      by Anonymous Coward

      On the other hand, one of the reasons why so many people abandoned SuSE was the fact that Novell did the deal with Microsoft. Few people who care about the future of Linux are still willing to give Novell any money. I'm probably just one of many thousands who switched from running SuSE to another distro. Unless they could magically press an "UNDO" button for that deal, they will have as much difficulty selling me ANYTHING as SCO will.

    • Oh come on,
      there's always going to be a market for support
      especially in businesses

      Most people do not have the skills to administer a system / network of systems
      Most businesses are not in the tech field
      It is far more cost effective to hire a third party company to provide support than to employ someone in-house

      This goes for any service, not just IT

      • I wasn't aware that Novell or Red Hat offered a service where they do system administration for your in-house servers.

        • Novell does, it's a service offering... you can effectively hire a MCNE to oversee your shop remotely for 150k per year, and he will basically do whatever you want, remotely.... or you hire novell consulting who will come to your site and do whatever....

      • Re: (Score:2)

        by tuomoks ( 246421 )

        Yes, there always is a market for support but - "It is far more cost effective to hire a third party company to provide support than to employ someone in-house" - an urban myth - if that would be true then also it would be more cost effective to hire third party to provide all the executive level "support" for the company / corporation / enterprise! Obviously doesn't work?

        There are other aspects for outside support, timing and getting to new for what there is not yet experience in company or for one time on

    • I don't agree with the comments on here that support is going to make money.

      do you think MS would be a multi billion $ company based around a support model?

      history shows service industries to be the poor cusions of people with something to sell.

      • Re: (Score:2, Interesting)

        by OrangeCatholic ( 1495411 )

        >history shows service industries to be the poor cusions of people with something to sell.

        MS probably could not be as big as they are with support contracts. But they have licenses, which is like a support contract where they don't have to do any work.

        MS and Oracle are all about IP. Just like support wouldn't work for MS, I doubt selling and licensing IP would work for most smaller software companies. There just isn't the need. Once you decide not to license from the big boys, everything else is chea

        • MS probably could not be as big as they are with support contracts.

          You REALLY think this?

          Sure, nobody in the OEM market has support contracts with MS (That's the whole point of the OEM license, is that Microsoft DOESN'T support it), if you look at retail, you do get limited support, and if you phone Microsoft with a bug and it's determined that it is a bug, then you don't get charged for support.

          ANY organisation that has a reasonable amount of installed computers ( >5000 in my experience, and certainly a lot smaller >1000 ) has a Premier support agreement with Micros

      • And where would IBM be if their business revolved around support? Oh, it does and they're worth $166bn with around a $10bn annual profit.

        There seems to be a misguided view among a lot of Slashdot readers that 'support' means 'answering the phone and telling people what to click on.' It doesn't. Support means taking products, which might be free or might be proprietary, and turning them into something that solves a specific business problem. Business problems are things like 'our departments aren't co

        • IBM is a rather unique case. They have been around a long time and still benefit from their historical reputation. They still make a lot of their money from selling hardware and software. A lot of their "support" service is geared toward selling IBM stuff.

          I don't think you could model a new company to emulate IBM and be successful.

          It seems people keep pointing to special case companies like IBM and Red Hat as proof that the service model works. How many start-up companies are growing based on the service mo

          • Well, I can point to a dozen startups within a couple of miles of here that are doing well using that model. My father's company grew from nothing in 1982 to having a half a million pound turnover when he left in the mid '90s using the service model. People aren't giving you these examples because you probably won't have heard of them.

            Your argument is somewhat like saying 'you can't make money creating a restaurant that sells good quality food,' pointing to McDonalds as evidence, and when people list v

      • Re: (Score:2)

        by jbengt ( 874751 )

        history shows service industries to be the poor cusions[sic] of people with something to sell.

        Citation needed.

        In my limited personal experience (working almost 30 years for consulting engineering companies) service industries make more money for far less investment than product-producing companies.

    • Re:I'm not surprised (Score:5, Interesting)

      by phantomfive ( 622387 ) on Sunday March 21, 2010 @12:00AM (#31555216) Journal
      Enterprise services are big business, IBM make $13 billion profit every year selling crappy software that does what people need.

      Novell has a huge asset (besides their pile of cash), and that is their customer base. If they can create an attractive way for their customers to move forward, they have strong potential for profitability in the future. All they need to do is figure out what their customers need, stick it in a pretty package, and the sales will basically take care of themselves.

      My understanding (from talking to employees at the company) is that Novell is a very bureaucratic company, and it is hard for new ideas to get backing inside the company. If they want to succeed they will need to overcome their inertia and become more nimble. There is no reason they can't do this: if they die, it will be because they got caught in their own tarpit and didn't have the will to change.

  • Companies like this... (Score:5, Informative)

    by Yaa 101 ( 664725 ) on Saturday March 20, 2010 @11:38PM (#31555126) Journal

    Companies like this is exactly what Elliot et al. wants, liquidize and suck out the billion dollars and throw away the empty shell and all the workers, these hedge funds are the scum of this earth

    • A company can only survive for so long making a loss of $200M on a gross revenue of $800M as Novell did last year. I don't know all the details of Novell's finances and maybe the management has a great plan to save it but in general there are cases where its better to put a moribund company out of it's misery sooner rather than later.

    • suck out the billion dollars and throw away the empty shell and all the workers, these hedge funds are the scum of this earth

      The current management is also busy sucking out the billion dollars, and sooner or later, they'll have an empty shell, too.

  • before the next crash.

  • I wonder if this could be traced to SCO and Yarrow. If Novell ended up going away, SCO would be free to try their questionable legal tactics again to get money from Linux users. Just tinfoil hat speculation.

    • possible but SCO wouldn't be free as the issue would have to be dealt with first, and IBM still has SCO in it's cross hairs.

      actually once SCO is decided Novell could suddenly be worth more.well unix assets as valued by SCO are only worth about 1 million that could change if clear ownership is shown.

  • Novell has made their own mess. (Score:3, Interesting)

    by miffo.swe ( 547642 ) <daniel.hedblom@gm a i l .com> on Sunday March 21, 2010 @04:59AM (#31556216) Homepage Journal

    Back when Novell bought SUSE they wore lining up to be the most important company of all. They had a core service, eDir, that let them connect Linux, Windows and Mac computers together and collaborate in a coherent way. They could be the spider in the net, connecting it all in the background. Microsoft would never even touch that market with a ten foot pole so they wouldn't compete directly with MS.

    Then came a series of very bad decisions like only (barely) support their own Linux version. kind of made their core service suck since you couldnt use it with any other Linux distribution than SUSE. They made a strange decision to use mono for their services. Things that was pretty reliable, like Zenworks completely blows with mono. Zenworks 10 is something your lucky if you get working, if you get a function realiable, go buy a lottery ticket. They made DSFW, domain services for Windows. A hard complicated and cumbersome way of running an AD. Why on earth would i want to run AD even crazier than on Windows?

    The patent agreement with Microsoft was the real letter of resignation. They had the technology to capture a untapped market. The customers existed everywhere (what company today dont have Linux machines all over?) and they could help them with very little effort because their core services was ready to go and much of them already worked on Linux. It was just a matter of compiling and testing.

    My theory is that upper management knew this and still opted for a quick buck. They sold their shareholders out in the long run, killing the company in the process.

    • The patent agreement with Microsoft was fascinating: it cost them Jeremy Allison, who I rather thought was the real reason Microsoft _wanted_ to trap SuSe in a web of patent issues. Even with the obvious failures of the deal to provide the open source publicity and support for cooperation with Microsoft's vague and undocumented patent claims, it was still well worth the money to Microsoft to leave Novell struggling and confusing the market with Netware, and driving Jeremy Allison away and slowing Samba deve

  • I will never forgive Novell for Groupwise. Pure evil in a red and white box.

  • It seems like public schools everywhere (up here in Maine, U.S. anyway) still use Netware for everything. I've always thought it would make sense for Novell to migrate them to a Netware/SuSE solution. The kids would win, because (hopefully) a Microsoft-free solution would be a lot cheaper for the schools, and Novell wins by keeping customers who will otherwise inevitably leave their platform as it ages.

  • they DUMP miguel mono boi and his crap!

    I wouldn't touch them with a 10000ft pole. Huge legal liability with that mess.

    Plus it would take so much to clean up SLES and OpenSUSE to restore it back to its previous stature as a top of the line distro.

    When you dump miguel mono boi, then you might be worth more than US $0.000001/cents.

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