EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

08.08.08

Microsoft and Novell Starve in Land of Buybacks

Posted in Finance, Microsoft, Novell at 4:53 pm by Dr. Roy Schestowitz

Living off one’s legacy

In the last roundup which discussed Microsoft’s approach towards debt, a sort of speculation was given with regard to Microsoft’s latest round of buybacks. It came from Bloomberg, based on analysis by UBS. We believe that Microsoft’s new buybacks (stock repurchase program) have just begun quietly. The stock surged, initiated by what Microsoft had to say, and then came these reports, which are only good news if you are an existing investor.

Bloomberg published a story today which said that the company is about to unveil a plan to buy back as much as $20 billion of its stock. The notion was attributed to UBS analyst Heather Bellini, who actually floated the idea in a July 25 analyst report. And she is not the only one who thinks a huge buyback would be a good idea: in a July 22 post, I noted a report from Friedman Billings Ramsey analyst David Hilal, who theorized that the company could do a leverage buyback and repurchase as much as $50 billion of its shares.

Microsoft’s share price is down 26 per cent so far this year. It has about $3 billion remaining of a $36.2-billion, five-year repurchase program it started in 2006.

What’s happening here is simple. Microsoft elevates its stock artificially by emptying its bank account. It’s not business success that drives the stock; it’s the pumping of money. It’s an illusion and it’s provably not sustainable. Whether it’s related to a general economical slump or not, well… that may be irrelevant. Investments in FOSS are said to have reached an all-time high. Recent headlines of relevance include:

That is a tipping point, no doubt.

As some people predicted, radical change in business models, software-wise, comes from implosion that the current recession can deliver.

Novell too is having a hard time. It’s already in ‘buybacks mode’ [1, 2]. According to the following new article from USA Today, this does not look good.

Shares of Novell (NOVL), a computer networking software maker, continue to fall as the company attempts to migrate customers to newer products.

And that’s the big risk: A cheap stock can get even cheaper as the business deteriorates. A stock may “look statistically appealing, and investors (are) seduced by it,” says Matthew Kaufler of Clover Capital. And that’s the danger, he says, of buying a stock “because of a price decline and nothing beyond that.”

Microsoft and Novell are in a similar situation and on the same boat. Moreover, they are both faking it with optimism.

Novell blinded by money

Image from Wikimedia

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New


  1. Links 18/4/2014: New KDE, Kubuntu, and More

    Links for the day



  2. Some Perspective on Heartbleed®

    Our views on the whole Heartbleed® bonanza, which seems like partly a PR stunt (for multiple stakeholders)



  3. Microsoft is Leaving Windows -- Including Vista 8.1 -- Vulnerable to Non-Government Crackers, Not Only to NSA

    Microsoft makes it ever more evident that securing users of Windows is not at all a priority, and perhaps not even a desire



  4. Links 17/4/2014: Android RDP, New Ubuntu, RHEL 7 Milestone

    Links for the day



  5. Racing to 1984: Mass Surveillance, Cracking, 'Targeted' Assassinations, and Illegal Torture

    Links for the day



  6. More Microsoft Subsidies to Patent Troll Intellectual Ventures

    Microsoft hands money to Bill Gates' close friend who is the world's largest patent troll



  7. Aiding Microsoft Under the Disguise of 'Pro-FOSS'

    Not everything which is FOSS necessary becomes, by virtue of existence, a positive contribution, as we are constantly reminded by projects that help proprietary software and/or restrictions get a strong grip on FOSS



  8. Links 16/4/2014: Red Hat PR, Ubuntu LTS Imminent

    Links for the day



  9. Links 15/4/2014: Lots of PCLinuxOS Releases, Ukraine Updates

    Links for the day



  10. Apple and Microsoft Actively Lobbying Against Patent Reform in the US

    Apple and Microsoft are reportedly intervening/interfering with US law in order to ensure that the law is Free/libre software-hostile



  11. Lawsuit by Microsoft Shareholder Targets Fine for Crimes Rather Than the Crimes Themselves

    A new lawsuit by a Microsoft shareholder shows everything that's wrong with today's model of accountability, where those who are responsible for crimes are accused of not avoiding fines rather than committing the crimes



  12. Public Institutions Must Dump PRISM-Associated Software

    Another reminder that taxpayers-subsidised services should refuse, as a matter of principle, to pay anything for -- let alone deploy -- proprietary software with back doors



  13. GNU/Linux News: The Opportunities Amid XP EOL

    Links for the day



  14. Microsoft Gets Its Money's Worth From Xamarin: PlayStation 4 Now Polluted by Microsoft

    The Trojan horse of Microsoft, Xamarin, is pushing .NET into Microsoft's console competitor



  15. After Brendan Eich Comes Chris Beard

    Having removed Brendan Eich using bullying and blackmail tactics, his foes inside Mozilla achieved too little as we have yet another man (coming from inside Mozilla) acting as CEO



  16. Healthcare News: Free Software in Health, Humanitarian Causes

    Links for the day



  17. Links 14/4/2014: MakuluLinux, Many Games, More Privacy News and Pulitzer Prize for NSA Revelations

    Links for the day



  18. TechBytes Episode 87: Catching up With Surveillance (NSA, GCHQ et al.)

    The first audio episode in a very long time covers some of the latest happenings when it comes to privacy and, contrariwise, mass surveillance



  19. Server News: KVM, ElasticHosts, Other GNU/Linux Items, and Open Network Linux

    Links for the day



  20. Hardware News: Freedom, Modding, Hackability on the Rise

    Links for the day



  21. Distributions News: GNU/Linux Distros

    Links for the day



  22. GNOME News: Financial Issues, Mutter-Wayland, West Coast Summit, Community Participation

    Links for the day



  23. KDE News: Kubuntu at the Centre Again KDE Applications Updated

    Links for the day



  24. Techrights Rising

    Effective immediately, Techrights will do what it takes to bring back old volume and pace of publishing



  25. Links: Surveillance, Intervention, Torture and Drones

    Links for the day



  26. Mobile Linux Not Just Android: Jolla, WebOS, and Firefox OS News

    Links for the day



  27. Google's Linux Revolution: New Gains for Android, Chrome OS (GNU/Linux)

    Links for the day



  28. Free/Libre Databases News: MongoDB, NoSQL, and MySQL Branches/Forks

    Links for the day



  29. Open Access on the Rise: Textbooks, Journals, Etc.

    Links for the day



  30. Finance Watch (Watching What's Not Being Watched): Economic Warfare/Class Injustice

    Links for the day


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts