Novell - A Contrarian View

June of last year had a large number of CEO related changes I recommended investors re-examine for investment possibilities. I recently reviewed two June 06' picks in the blog, International Flavor & Fragrances (IFF - NYSE) and L3 Communications (LLL - NYSE). Another large company selected last June was software laggard Novell (NOVL - NYSE). Novell seemed to have been past by its competition for awhile and was viewed by many as an industry tortoise who could no longer compete in the race.

Back in June, the company after continuing poor results, along with growing outside pressures replaced its CEO, Jack Messman with the company's number two man, Ron Hovsepian. At the time of his selection, Hovsepian was the President and Chief Operating Officer. Many analysts and people familiar with the industry were skeptical another CEO would solve the enormous problems facing Novell. I saw Hovsepian as an excellent choice, who had a reasonable chance to make a difference at Novell over the long-term. He had three years at Novell where he moved up the corporate ladder rapidly and over seventeen years at IBM.

Hovsepian had a good combination of skills to bring to bear for the position. He understood Novell's business model and product base and more importantly, he knew how to deal with customers and the market. Messman was more an "engineer personality" and just was not able to easily articulate what he planned to do or how to work with customers. He ultimately failed to get the company to address the serious issues it had been facing. Neither Messman nor the previous CEO before him, Eric Schmidt were able to put the company on a sustained growth path.

Hovsepian, who has been making great strides since his promotion to the top, has yet to get it exactly right but he is moving in the right direction. So far, what he has accomplished has not impressed too many on Wall Street but he seems to be making the right moves. He has continued to cut costs, he has focused his efforts to make Novell a player in Linux for the enterprise taking a somewhat different strategic approach to Linux than that by Red Hat, its major Linux competitor. He was in charge when Novell began a controversial Linux partnership with Microsoft. In essence, Hovsepian has focused his efforts on the customer and if time manages to remain on his side, his latest prediction that 2008 will be the firm's boon year may actually come to fruition.

Keep watching Hovsepian and how he is managing Novell.

More on Novell:

May 7 - CBS News - Dell Joins Microsoft, Novell Alliance
May 7 - Endgaget - More on Dell Joins Microsoft, Novell Alliance
May 7 - BloggingStocks Take - More on Dell Joins Microsoft, Novel Alliance