CyberTech Rambler

March 3, 2010

Bid to take Novell private

Filed under: Uncategorized — ctrambler @ 1:39 pm

Someone is trying to take Novell private. That Reuters’ piece is also interesting for another reason: It is filed in Bangalore.

Anything sinister or it is just a investment smelling an opportunity to make money on an undervalued company? Let us wait and see.

What is the sinister side you might think? For me, it is Microsoft orchestrating this move in order to buy Novell. Strategically it makes perfect sense. If I were microsoft would stay in the background, let a third party do the work of taking it private and promise to buy it from them for say cost + 25%, for two reasons: (1) My rivals, especially my competitions, will drive up the price if I publicly want to buy Novell and (2) It is easier to buy a private firm then a publicly listed one: Just look at the Microsoft-Yahoo tie up if you want a recent example.

I think Microsoft has plan to buy Novell. It makes sense because Microsoft needs a ‘Linux presence’. Acquiring Novell, which is by Microsoft’s cash pile standard, cheap, give it the market share it needs to make its presence felt in the Linux sphere of influence. The Microsoft-Novell’s deal, to me, other than the GPL controversy and the IP FUD, prepare the groundwork for the purchase as well. How? Microsoft selling SuSE coupons. If it sells well, and the company wants us to think that it sells well, it helps convince skeptics to take the plunge.  It also buys time for Microsoft to make up its mind. And finally, it is also an experiment to see whether a close tie-up of Microsoft-Novell or Microsoft buying Novell is a better business solution.

I cannot see any downside for Microsoft buying Novell except on public relation ground. Public relation alone is not going to stop a hard business head like Microsoft to abandon a business move. That is actually what I like about Microsoft.

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