If you own shares of Novell
The software designer is in the midst of going private, with a firm offer already signed, sealed, and delivered. The fact that Novell met non-GAAP earnings expectations exactly at $0.07 per share, and beat the revenue consensus with a $207 million performance, doesn't change the private equity offer one bit, nor do I expect the numbers to derail the buyout in any way.
Seriously, just go sell your shares right now. Prices are locked in at about $0.13 below the $6.10 buyout offer, come hell or high water. They're not going anywhere -- you might as well just earn interest on the cash balance instead, if you don't have any better investments in mind.
Owning Novell now is like hanging on for dear life to Blockbuster shares as that company spiraled into bankruptcy. There is no bidding war, no rumored higher offer, and the well-heeled Novell buyers aren't likely to get cold feet. The one thing that could change Novell's fortunes now is a negative shareholder vote or regulatory intervention of some sort, both of which would do some serious damage to your holdings. There is no upside, only risk.
It's easy to replace Novell with an equivalent holding, and you even get to pick which part of the company you liked the most:
- The market leader in the Linux and open-source space is Red Hat
(NYSE: RHT) (Nasdaq: CTXS) - Maybe you loved the legacy systems in Novell's portfolio, such as Netware, and want to milk cash out of long-established product lines. Computer Sciences
(NYSE: CSC) - Or perhaps you saw Novell as a turnaround story in the making. Some would sell you flailing giant (and Novell partner) Microsoft on that basis; others look to scandal-damaged Hewlett-Packard.
It's your money and your portfolio -- only you know what to do with it. Just don't let it wither in Novell shares, exposed to some risk but no reward opportunity, unproductive and unloved. You can do so much better.
