Estimating the Value of Novell's Linux OS

Amid speculation about Novell being acquired, what's the major open source vendor's Linux OS actually worth?

Novell, the parent company of SUSE Linux Enterprise Server, seems to have slapped a huge "For Sale!" sign on its front lawn. It's sad, but this famous enterprise OS maker may soon be little more than a mildly interesting footnote to history.

A few weeks back, the company received an unsolicited conditional proposal from the hedge fund Elliot Associates to acquire the 91.5 percent of Novell it didn't already own for $5.75 per share, or around $950 million (net of cash). Novell's board sat and had a think about this and, surprise, surprise, decided the company is worth more.

Well, it would say that, wouldn't it? It was hardly likely to say that its business, which consists of little more than a second-rate enterprise Linux distro, was worth less. The likes of Novell never tell their shareholders to take the money and run.

Instead, the board of the once mighty Novell has promised to look at other ways of keeping its shareholders happy -- whether it be by bribing them with a juicy cash dividend or buying back stock, through strategic partnerships, alliances and joint ventures (whatever that means), or "a recapitalization and a sale of the Company."

Now, as a shareholder you always have to worry when a company you invest in thinks the best thing it can do with your money is give it back to you. The reality is that these options, save the last, are just face-saving measures. The real message from Novell is "come and get me, I'm anyone's for a halfway decent price." A couple of weeks back I looked at the possibility of Microsoft buying Novell's Linux business , and there's no doubt the same thought will have crossed the board of Novell's collective mind.

Read the rest at ServerWatch.

Tags: open source, Linux, enterprise software, open source tools, Novell

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