Novell versus Veritas - 500 Beiträge pro Seite

[Joe Rocket]

Novell Versus Veritas
by Chris Connor

The Match-Up
Fighting out of the red corner is the winner of a hard-fought battle with Brocade {BRCD} in the first round, Novell {NOVL}. Fighting out of the blue corner is Veritas, who squeaked out a victory over fellow storage giant EMC {EMC} in the opening round. This match-up pits the tournament`s two software powerhouses against each other. These two companies have advanced to the second round because the efficient management of data will be the most crucial concern for the post-PC era.

Round 1: Which Company has the Superior Leadership Position?
Although Veritas is the world leader in storage management software, Novell has a tighter grasp on the directory market. Veritas has to contend with a number of major companies such as BMC software {BMCS}, Legato {LGTO}, IBM {IBM}, Sun Microsystems {SUNW}, and EMC. Software may make up a small amount of EMC`s total sales, but EMC`s presence in storage software is undeniably significant. Novell`s directories have been superior to competitors` directories for years - including those proffered by software juggernaut Microsoft {MSFT}. Now, Novell has separated its directories from its floundering Netware products to extend its leadership in directories. Chalk this round up to Novell.

Round 2: Which Company has a Better Growth Record?
Without question, this round goes to Veritas. Novell has suffered through some tough years and appears to just now be getting back on track. On the other hand, Veritas has been on fire. Over the past four years, Veritas grew its revenues from just $15 million in the first quarter of 1996 to an outstanding $226 million in the fourth quarter of 1999, while Novell`s revenues declined from about $438 million in the first quarter of 1996 to around $345 million in the fourth quarter of 1999. In addition, Veritas has increased its revenues thirteen straight quarters on a quarterly basis and twelve straight quarters on an annual basis. Projected growth also goes to Veritas. Analysts predict that Veritas will grow its earnings 47.8 percent per year over the next five years while they project that Novell will grow its earnings only 20.9 percent over that same time period.

Round 3: Which Company`s Industry has a Brighter Outlook?
This final round will decide the outcome of the match-up. Although both software companies provide products that enable customers to manage their data more efficiently, these two companies serve completely different markets. In fact, some people may not consider Novell to be a storage company, but Novell is involved with Internet caching and its directories allow access to network storage from any location. Veritas` software performs more hands-on functions such as backing up data, protecting against storage hardware failures to eliminate business interruptions, increasing storage capacity, and speeding up data delivery. Furthermore, Veritas will ultimately be one of the major factors that renders Storage Area Networks (SAN) more user friendly. Nevertheless, directories could be to networks what Windows has been to the PC. Directories ensure that companies can communicate securely with their networks and those of their customers and partners. This communication between company networks facilitates optimal transaction of e-business. Via this technology, for example, suppliers can always be well-informed about shipment schedules, and important data can be gathered at the blink of an eye. Moreover, directories can capture user-specific information to better target customer preferences; every e-commerce company seeks this information to increase sales. Simply put, Novell`s directory service has outgrown the boundaries of a software product to become the preferred standard for organizing and managing data on a network - which gives the storage referee authority to raise Novell`s hand in this round.

The Winner
Novell defeats Veritas by a split decision and moves on to face Network Appliance {NTAP} in the championship. Novell will definitely have its work cut out for it as it goes against the most dominant company in this tournament thus far. The interesting point about this match-up for the championship is that both are major players in Internet caching. Can Novell stop Network Appliance in its tracks or will Network Appliance sweep another opponent? Find out in the championship.

*This report is part of a multi- part series about storage in the post-PC era. Click here for the initial report that profiled the entire storage industry.

Disclaimer: This report is published solely for informational purposes and is not to be construed as advice or a recommendation to buy or sell a security. Trading involves risk, including possible loss of principal and other losses. Your trading results may vary. No representations are being made that utilizing techniques mentioned in this article will result in or guarantee profits in trading. Past performance is no indication of future results.

[Joe Rocket]

Stocks in Focus Feb 9 2000 10:00AM CST Archives...
Data Banks of the Post-PC Era*

The Championship: Network Appliance Versus Novell

by Chris Connor

Click here for the introduction to the Ultimate Storage Championship.

The Match-Up
This is the last installment of the storage series and the final match of the tournament - the big one. This match will determine the ultimate storage company for the post-PC era. Fighting out of the red corner is the leader of Network Attached Storage (NAS) and Internet caching, Network Appliance {NTAP}. Network Appliance bulldozed its way over both JNI Corp {JNIC} and Sandisk {SNDK} to get to the championship round. In fact, NTAP has not suffered a single defeat in any round of this tournament, so far. Fighting out of the blue corner is Novell, a major turnaround company that leads in directory services. Directories allow access to network storage from any location. In contrast to Network Appliance, Novell has clawed and scratched its way to this final match. Novell managed to squeeze out wins over two extremely impressive companies, Brocade {BRCD} and Veritas {VRTS}. The importance of Novell`s directories is the primary reason that it was able to vanquish those two companies and now finds itself ready to face Network Appliance for the championship. Let the fight begin.

Round 1: Which Company has the Superior Leadership Position?
This will undoubtedly be the toughest round of this match because both companies dominate their respective markets - Novell with directories and NTAP with NAS. Network Appliance towers over the other NAS hardware companies with unquestionable credentials of superiority. Network Appliance`s preeminence stems from its Write Anywhere File Layout (WAFL) system, which facilitates the best data sharing solution in NAS. More recently, there has been news that Network Appliance will be the only company representing NAS in the announced SAN-NAS combination, with Veritas, Legato {LGTO}, Vixel {VIXL}, Quantum ATL and Spectra Logic addressing the SAN half of this partnership. Moreover, the NAS appliance will be the central feature of this combination.

Novell will likely extend its lead in directories now that directories can be purchased separately from Netware, but Microsoft {MSFT} could turn the heat up on Novell soon. Microsoft`s massive marketing power will be behind its Active Directory which will comprise part of the long awaited Windows 2000 operating system. People who have used directories from both Novell and Microsoft usually prefer Novell`s (which is why Novell has been able to dominate directories), but Microsoft will probably begin to dedicate more resources to this market since directories are emerging as crucial tools for conducting e-business. The likelihood that Microsoft would buy out Novell is slim because it would probably have to be a hostile takeover. It is probably judicious, however, not to underestimate the power of the Redmond giant.

Despite formidable competition from Novell, Network Appliance makes it seven straight rounds without a loss.

Round 2: Which Company has a Better Growth Record?
Make that eight straight rounds without a loss for Network Appliance because Novell is weaker in this round than any other company in this tournament. Since Novell was forced to reinvent itself, the company has reported dismal results until just recently. In stark contrast, Network Appliance has exhibited more rapid and consistent growth than any other company in this tournament. On a yearly basis, Network Appliance`s revenues increased 90 percent from $65.6 million to $124.7 million from 1998 to 1999. On a quarterly basis, Network Appliance`s revenues have grown an average of about 15.5 percent each quarter for thirteen consecutive quarters. Network Appliance`s earnings per share have also grown consistently - with nine consecutive quarters of EPS growth. Looking to analysts` projections for the future growth of these two companies, Network Appliance wins by a landslide. Analysts predict that Network Appliance will grow its earnings 48 percent per year over the next five years while they project that Novell will only grow its earnings 20.9 percent per year over that same time frame.

Round 3: Which Company`s Industry has a Brighter Outlook?
Uh oh. Network Appliance suffers its first defeat in a round. The problem that Network Appliance faces is that no company in this tournament can defeat Novell in this round, because the reach of directories is too great. In addition, Novell and Network Appliance cancel out Internet caching here since both companies are major players in this arena. Directories not only serve as a form of NAS, but directories also serve as business-to-business (B2B) infrastructure since they enable companies to communicate securely with their networks and those of their customers and partners. Directories can also be used to customize products and services based on user-specific data that they are able to gather. In other words, directories can also be used as a powerful marketing tool. Novell`s directories even make instant messaging possible. As a matter of fact, Novell has a business-oriented instant messaging deal with America Online {AOL}. Although it lost this round, Network Appliance also has unbelievable potential because the SAN-NAS combination should develop into the top network storage standard.

The Winner
The winner and the ultimate storage company of the post-PC era is Network Appliance. The NAS-SAN combination (of which Network Appliance is one of the key leaders) is also the likely storage standard of the post-PC era. Without getting into valuations, Network Appliance could be the company that every investor dreams of - because Network Appliance dominates an industry with nearly unlimited potential and the company has demonstrated superior execution with its rapid and consistent growth record.