Novell, which has been at the centre of acquisition speculation for over a year, has prepared a poison pill defence to protect shareholders in the event of a hostile takeover bid.
It has drawn up a rights plan to maximise shareholder value. The plan gives shareholders better negotiating powers if a potential buyer acquires 15 per cent of Novell's outstanding shares.
Last month, Wall Street rang with rumours that Netscape would make a bid for Novell.
But Novell said the shareholder rights plan, which the company submitted to the Securities and Exchange Commission last week, was not designed to prevent a takeover. It said the aim was to 'deter tactics designed to deprive the company and shareholders of an opportunity to control the company's destiny'.
Rick Sherlund, an analyst at Goldman Sachs, said poison-pill policies were commonplace for many companies and Novell might have taken the action for a variety of reasons.
Commenting on Novell's recently announced Q4 results, Sherlund said: 'Novell has done a terrific job of cutting costs and rationalising its business, getting out of areas that don't make sense. The business is making progress.
'But I stop short of saying that they are going to flourish in the future while their traditional business continues to be encroached on by NT.'
Novell reported flat Q4 earnings, but said there had been a five per cent improvement in sales from Q3. Net income for the quarter ended 26 October was $59 million, or 17 cents per share, compared with last year's net income of $59 million, or 16 cents per share on a larger number of shares outstanding.
The company has discontinued or sold several major product lines in the past year and has made some positive if belated moves into the intranet market on the back of its Intranetware product.
Novell president Joe Marengi said sales of its Netware server software line grew 15 per cent in Q4, compared with Q3, to $247 million.
He noted that sales of the company's Groupwise groupware product increased 18 per cent over the same period.
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