Defending Novell On Wall Street

Sometimes, investors have the right to attack Novell. But this time around, at least one financial analyst firm seems to be beating up on Novell for a rather foolish reason. Here’s the scoop, from The VAR Guy.

First, a little background. The VAR Guy does not give investment advice. Nor is his favoring Novell over other Linux distribution providers.

Instead, he’s merely pointing out a rather foolish fact: Jeffries analyst Katherine Egbert has downgraded Novell’s stock because Novell wants to use its cash to pursue acquisitions rather than dividending it back to share holders, according to Barron’s.

Let’s make sure The VAR Guy understands Egbert’s logic:

And Egbert is suggesting Novell pay dividends rather than make acquisitions? Frankly, Egbert’s logic doesn’t add up. When company valuations are falling fast, that’s when you comb the market for great buying opportunities.

Novell’s commitment to making targeted acquisitions is the right one.

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