I feel there is some IT investment aspect I should pontificate about in the assumption of Novell's (NOVL) disparate businesses by private equity firms but instead I am just sitting here thinking longingly about my '55 Chevy. I should have kept that beautiful car after I got married. Think what it would be worth today. My new wife -- who had to have a station wagon -- was clearly selfish. Novell's demise is billed as a takeover by Attachmate, but it is really just a case of two old wrecks being kept in the same private-equity-firm junkyard -- my '55 Chevy over there where I parked it more than 40 years ago beside an Edsel.
The idea of junkyards back in the day was that you could go in and get replacement parts on the cheap. As I explained in March, that was the idea of Elliot's initial offer for Novell. I didn't think it was an especially great idea then but it was the only game in town for Novell shareholders and held some promise for Novell users. Now -- instead -- Novell is going to be stripped of its useful parts, its patent portfolio, before it gets towed. No one gets the bittersweet satisfaction I had of at least driving my Chevy into the junkyard.
The takeover was apparently orchestrated by Microsoft (MSFT). The amount Microsoft paid for the patents probably drove the Novell share price up a measly 10% from the Elliot offer in some way I can't figure that makes it look better than the March 2010 offer. But does that mean that without Microsoft's $450 million, Novell management would have taken 10% less than Elliot offered? Maybe Elliot's funding came from Irish banks and that offer was off the table?
I can't figure out the patent-portfolio deal itself either. I haven't seen a good explanation but don't want to bother trying to figure it out. Instead I think I'll go see some grandkids for Thanksgiving so I can get groped by TSA. The deals seems to have something to do with the Novell-Microsoft joint development arrangements of 2006 and probably in some backroom way also settles the Wordperfect lawsuit. But I don't think it matters to Microsoft shorterm. Microsoft probably has had the money reserved against losing to Novell since Alan Ashton and Bruce Bastian first fired up the minicomputers on which they founded SSI.
But because I don't think the original idea was a good one, I don't think Microsoft makes out very well either. Certainly the Novell users don't make out. And the open source community thinks it's being bamboozled somehow. These zealots are always convinced that they're being screwed in some way even though they claimed the Microsoft-Novell deal had no value in the first place. Maybe the zealots can get Neelie Kroes to investigate the deal and hold it up for a year.
As for Novell, what a way to end a great run, parked over there by the Edsel. But in a way taking it off to the private-equity-firm junkyard was sort of a humane thing to do in a Software Museum sort of way. Without it, Novell would have just been left in the back of the parking lot in Bear Hill Industrial Park in Waltham until the rust turned to dust. Instead I imagine the wreck of Novell sitting in the junkyard getting the beautiful view of the Wastach it deserves.
-- Dennis Byron
(No financial interest in companies mentioned)