Novell downgraded to "underweight"

03/01/05 - Prudential Financial

NEW YORK, March 1 (newratings.com) - Analyst Brent Thill of Prudential Financial downgrades Novell Inc (NOVL) from "neutral weight" to "underweight," while raising his estimates for the company. The target price is set to $7.

In a research note published yesterday, the analyst mentions that the company has filed an 8-K for its F1Q results, announced on February 22, to reclassify $6.1 million of its revenues in the license category instead of the maintenance and services category. Following the reclassification, Novell's license revenue for F1Q has declined 19% yoy, instead of the 8% reported earlier, the analyst says. Prudential Financial expresses its concern regarding the company's weakening fundamentals and poor execution strategy. The EPS estimate for 2005 has been raised from $0.10 to $0.11.