Michael Dolan Dot Com

Thursday, March 4th, 2010

Elliott Associates, Novell, and primetime IT market speculation

There’s obviously been a lot of talk and speculation since the Elliott Associates announcement. I had started drafting a post looking at the key scenarios and add my own take on how this could play out when I ran into Andy Updegrove’s take over here. Andy nails it. The only part that I’m not “in the boat” on is his take on the Microsoft importance. I actually wonder if this isn’t exactly what a certain person in Redmond wanted though I’ll keep my reasons to myself. ;-)

One thing is for sure – this is going to be a roller coaster ride for Novell execs and employees. Novell actually has a lot of cash relative to its revenues so it was only a matter of time before someone would go raiding. Elliott is in it for a flip profit … and the financials are lined up perfectly. (or someone behind Elliot who is in it for other reasons ;-) This is a savvy move, but also as Andy says a potentially dangerous game – if they win and overpaid.

If you’re reading any analysis of the situation, make sure you read Andy’s take in the link below. At the end of the day, the GPL, Suse, the technology, etc won’t matter – this is going to be a nasty game billion dollar chicken game for profits.

http://www.consortiuminfo.org/standardsblog/article.php?story=20100304051547830

I haven’t seen any article yet, though,  that describes in detail how the high stakes game of tender offers is played, and how the usual process maps (and doesn’t) to a high tech company like Novell.  So I thought I’d provide an overview for those that haven’t had occasion to follow a tender offer in the past, and also my thoughts on what may happen over the next several months in this particular game of cat and mouse.