Novell VARs worry in wake of proposed buyout

Novell's intellectual property trove could draw other bidders, VARs say.

Novell Inc. and SUSE VARs are scratching their heads over a surprise bid by a hedge fund to buy Novell.

The $2 billion offer from Elliott Associates LLC of New York was disclosed late Tuesday. Novell subsequently said its board would consider the offer.

Novell, despite several tough years and what many consider the mishandling of its buyout of SUSE in 2003, still has many reseller and implementation partners, and all of them are now worried that customers will be confused about the vendor's long-term prospects.

"Fear, uncertainty and doubt, is certainly a factor now," said Gregory Rosenberg, CTO of RICIS Inc., a Tinley Park, Ill., Novell partner.

The fear -- or hope -- is that if Elliott succeeds, Novell will be cut up into pieces and sold off piecemeal. Some VARs said that the company would be better off jettisoning things like its groupware and collaboration business to focus more on virtualization, management and SUSE Linux.

But the issue now is that no one knows what's going on.

"Who are these people buying Novell and what will they do with it? The problem with Novell being bought by a non-tech company is it could become some sort of a patent troll bottom feeder," said Francis Poeta, president of P & M Computers Inc., a Cliffside Park, N.J., Novell partner.

Novell controls core Unix patents and, as such, is of huge interest to other tech companies, from IBM and Hewlett-Packard to Microsoft. Both Microsoft and IBM own parts of Novell.

Novell's intellectual property library could well attract other suitors if Elliott persists, several VARs said. "You wonder if Larry Ellison might get involved," said Frank Basanta, director of technology for Systems Solutions, a New York -based Novell VAR, half jokingly.

Ellison is CEO of Oracle Corp. and has become notorious for his appetite for tech acquisitions ranging from PeopleSoft to BEA Systems.

Other partners take the prospect of Oracle jumping in very seriously. "I don't even want to think about it, but it's quite possible," said Rosenberg.

Several VARs maintained that other tech vendors would not let Novell fall into a bad situation. "If necessary, I could see Citrix buying Novell as a Microsoft proxy," said one. Microsoft could attempt a buyout, but that would certainly raise antitrust concerns, they said. IBM, in addition, is tightly aligned with Novell.

For the time being, Basanta said, there's nothing to do but wait and see what happens.

Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com, or follow us on twitter.

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