Michael Dolan Dot Com

Tuesday, September 13th, 2005

Wall Street Damaging Long Term Tech Growth?

How much impact does Wall Street have on a company? Too much? I saw this excellent article from Jack Trout at Forbes.com which basically says the Street’s obsessive focus on growth is troublesome. The focus on short term growth hinders a company’s ability to plant the seeds for long term profitability.

He puts it best saying:

“Wall Street often creates an environment that encourages bad, sometimes irrevocable, things to happen. In a way, it sets up a greenhouse for trouble, and like a greenhouse, it’s all about encouraging things to “grow.”

Then I also read this week about Novell. I must admit I am a Novell shareholder simply b/c they are undervalued and yet have the best Linux / OSS value proposition in the industry. They have the tools to truly compete with Microsoft. With Linux behind them, this is a real possibility. They’ve made many great moves. First they acquired Suse, then launched a HIGHLY successful OpenSuse which I just read is growing by 5,000 users per day and is downloaded every 18 seconds. What a great story to show for planting the seeds for future Novell sales and technical skills. Linux has always been about choice and OpenSuse brings that choice back to the Suse community.

Ahhhh… but then there’s Wall Street. Just look through this list of headlines from last week. First you’ll notice Novell was upgraded… then CSFB and investors urge Novell to make changes, give Novell advice… Now the company has done a 720 degree turnaround from having an absolutely end of life product suite to now having the most promising and exciting suite around…. and now investors want to make demands??? Let them execute! Let them grow their seeds and reap the rewards. Linux is growing far faster than the market – Novell will catch up in revenues.

I only hope Novell looks to the long term and ignores what I consider to be a near sighted request from investors…